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43 Tax Foundation's Tax Review 1 (1982)

handle is hein.tera/tafoutaxt0046 and id is 1 raw text is: (Tax Foundation's J Tax Review National Defense and Fiscal Policy By The Honorable Caspar W. Weinberger Our Administration is fully and completely commit- ted to reducing the burden of taxation on both individ- uals and corporations. The President has pointed out many times that corporations are not the groups that pay taxes. It is the people who ultimately pay them, and so he has been concerned particularly with the need to reduce both forms of taxation. Some Hopeful Signs We have now been in office 10 months. That really is not quite long enough to eliminate the ills of the past 15 or 20 years, but there are some very hopeful signs. Some of the things that we believe will happen when all of our new policies are in effect and have had an opportunity to work are starting to happen now. Things are not in the condition that we would like, but they are beginning to look up, after really quite a short time of 10 months- and, actually, the program has been in effect only two months. Already interest rates, the short-term rates par- ticularly, are indeed coming down. The prime rate, in just a little over nine weeks, has gone from 201/2 percent to 16 percent. Long-term rates are starting to come down. The inflation rate is coming down to the point where many people were quite sure that last month's statistics had to have some kind of error, because the CPI rose by only .4 percent in October, which is annualized at about 4.5 percent. By current standards that is so unbelievably good that people think it is a statistical mistake. But, of course, I remember just a few years ago, when an infla- tion rate of 4.5 percent triggered all kinds of demands for wage and price controls. So that can show you how far we have come in that period of time. It's all compar- ative. That is the lowest figure of inflation in 15 months. The annual rate for 1981 will be just about 10 percent, maybe a little less, with any luck. Last year it was 12 percent. We are starting, I believe, not only clearly to move in the right direction, but I believe we will continue in that direction. We were very encouraged with the new All Savers Certificate, which is one of the measures designed to encourage saving. That provided a little over $15 billion in deposits in just the first few days of October. Some of it came from other deposits and other forms of savings, but there was a considerable amount of new money. The $15 billion total did exceed expectations in those first few days. Increased Savings The percent of after-tax income that Americans are saving, which was one of the more worrisome statis- tics-and we were particularly worried about it in De- fense, because it translates into investment-was one of the lowest of any industrialized nation in the world. This has now started a healthy recovery, and moved from 4.3 percent in January to about 5.3 percent as of today. All these things are encouraging. They certainly do not mean that we are out of the woods, but the Presi- dent's program is working, and I think its prospects are very good. It has been under heavy criticism, and in this very fragile and sensitive area, it is entirely possible for us to talk ourselves, or write ourselves, or even imagine ourselves into far worse conditions than we actually have, because so much is built on expectations for the future. I think that if we look at what is happening on the economic front and how long the country has been on the wrong path and how much there is to work out of the system, then I do feel quite encouraged. Most This Issue In Brief This issue of Tax Review presents remarks adapted from a speech delivered by Secretary Weinberger at the Tax Foundation's 44th Annual Dinner at which he received the Foundation's Dis- tinguished Public Service Award for 1981. The views expressed are those of the author and not necessarily those of the Tax Foundation. Copyright 1982 by Tax Foundation, Incorporated, 1875 Connecticut Avenue, N.W., Washington, D.C. 20009 (202) 328-4500 1

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