Tax Amnesty: An Old Debate as Viewed From Current Public Choices

Abstract

The Clinton administration arrived with specific, well-advertised goals: job creation, a comprehensive national health care program, economic recovery and a commitment to reduce the constantly increasing federal deficit. There is no question that President Clinton has established these policy objectives as the primary criteria upon which he desires his forthcoming leadership efforts to be judged by the electorate. Success on these domestic issues would enhance his position for re-election in 1996, and would merit well-deserved respect for leadership and judgment. Whether all of these separate but related goals can be achieved within both the short and long term, without being counter-productive to each other, presents one of the more intriguing enigmas faced by the administration.
Job creation and a comprehensive national health care program will necessarily consume more revenue in the short term. Consequently, the federal deficit will increase unless new resources are found to pay the costs of these programs and unless acquisition of such resources does not significantly impair the economic recovery in progress. Indeed, the current economic recovery can, on its own, deliver significant dividends. Nevertheless, the search for resources will be one of the more consuming and politically sensitive issues facing President Clinton. The new resources may be generated by any of the following items: (I) a cut in government expenditures, including mandatory programs; (2) an economic dividend generated  through restructuring of the health delivery system; and (3) an increase in tax revenues. Notwithstanding the anticipated economic dividend to be generated from the restructuring of a health delivery system, it is likely that only cuts in federal expenditures coupled with increased tax revenues will provide the funds necessary to attain and sustain President Clinton's goals as laid out in his State of the Union Address.