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28 Tax Features 1 (1984)

handle is hein.tera/taxfeaturs0028 and id is 1 raw text is: TATO FTU Taxing/Spending Revoluton Described by CEA Chairman f~teWin 3 Uffrtin Feldstein, Chairman of the Council of ip Economic Advisers, strongly endorsed the Reagan economic program in remarks he . delivered in accepting Tax Foundation's Distinguished Public Service Award for 1983 in New York on November 30. I fully support the President and his economic program, Feldstein said. I think it is fair, balanced, and a comprehensive program. I believe strongly in what he is trying to do, and I plan to stay in Washington to help him do it. The support of the President's tax and spending reduction effort was added to the text of the speech ad- dressing what the President's chief economist called A Quiet Revolution in the structure of government spending and the character of our tax system. Feldstein began his prepared remarks with a review of why and how public spending has increased so much in the last three decades in the United States: 'There can be no doubt that the shapers of the new American nation accepted Adam Smith's view that a small government is most conducive to economic prosperity, he said, adding that this low-spending viewpoint prevailed for more than a century and a half. As recently as 1929, he said, Federal government spending took only 3 percent of our nation's gross na- tional product (GNP). With the Great Depression and World War II spending exploded, Feldstein said. By 1960, nondefense spending, excluding interest, took just over 8 percent of GNP. By 1980, it was claiming more than 15 percent. 'The experience with the depression and the war predisposed the American public to accept new ideas about the proper role of government, Felds- tein explained. The CEA Chairman charged that the nearly four- fold rise in real domestic spending between 1960 and 1980 did not reflect what the public wanted. He claim- ed that the new programs did not take into account the future burdens they would place on the economy, fre- quently underestimated future costs, failed to anticipate that introducing new programs or liberalizing old ones would change economic behavior, and overestimated the future growth of the U.S. economy. I believe, Feldstein said, that if the public had properly foreseen the future costs of the expanded social programs or the modest rate of economic growth during the past two decades, the Congress would not have enacted all of those programs. He also observed, Once those programs were started, it became ex- tremely difficult to stop them or even to reduce the level of benefits. The end of the decade of the 70s saw a changing mood about public spending, according to Feldstein, a mood that found expression in state and local taxpayer revolts, the election of President Reagan, and a will- ingness in Congress to reduce spending and taxes in preference to creating new social programs. This quiet revolution has produced lasting results, Feldstein said: * Social Security's share of GNP will shrink to 4.6 percent over the next four years. 9 Government spending on all domestic activities ex- cept Social Security and Medicare is down to 7.7 per- cent of GNP and will hit 6.9 percent by 1986 fiscal year, the same share as such domestic spending took in the late 1960s. (Continued on page 4) Tax FOundation Names Thomas 1984 Chairman W Bce Thomas, Vice Chairman- Administration & Chief Financial Officer of United States Steel Corporation, was * elected to his second term as Chairman of the Tax Foundation, Incorporated, by the Foundation's Board of Trustees at their November 30 meeting in New York. Thomas M. Macioce, President & Chief Executive Officer of Allied Stores, was also reelected for another one-year term as Chairman of the Board's Executive Committee. Newly elected as a Vice Chairman of the Foundation's Board is Hans W. Wanders, Chairman of the Board of Wachovia Bank & Trust Company, N.A. and The Wachovia Corporation. He joins Vice Chairmen John A. Love, Chairman of the Board of Ideal Basic Industries, Inc., and Fred L. Hartley, Chair- man and President of Union Oil Company of Califor- nia, both of whom were reelected for one-year terms. Fred J. Leary, Jr., Executive Vice President (Retired) of Bankers Trust, was reelected Treasurer of the Founda- tion. Robert C. Brown was elected President of the Tax Foundation, filling an office that had remained vacant for several years. He was also named to retain the positions of Executive Vice President and Secretary of the Foundation. THIS ISSUE: PAGE 1: Reagan Tax Program Reviewed TF Elects Officers PAGE 2: Tax Changes PAGE 3: '83 Scorecard Front Burner INSERT: Consensus Forecasting TAX FOUNDATION, INCORPORATED One Thomas Circle, N.W., Suite 500, Washington, D.C. 20005 New Telephone: (202) 822-9050 TAX FOUNDATION'S MONTHLY VOL. 28, NO. 1 JANUARY 1984

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