Restoring the American Dream: Bob Dole's

Pro-Growth Plan for America's Families

America today is competing in the most dynamic world economy we have ever seen. Scores of countries populated by hundreds of millions of people are discarding central planning in favor of free enterprise. New markets are opening to American goods and services. Entrepreneurs are developing new technologies to create products we could have only dimly imagined just a decade ago. America stands on the threshold of a breathtaking future, with greater opportunities for economic growth and prosperity than at any time during our nation's history.

Yet, rather than seizing these opportunities, the Clinton Administration has taken a "grow slow" approach to American economic policy. Clinton Administration officials have apparently concluded that the current average annual growth rate of 2.4% represents the outer limit of America's economic potential. The American people have paid a high price for the Clinton Administration's neglect: growth is anemic; incomes and wages are stagnant; and workers understandably feel more and more anxious about the future.

In order to create rising incomes for all Americans, we must commit ourselves to a far more ambitious endeavor. Growth must be the central goal of U.S. economic policy. Economic growth--and the rising living standards and prosperity it creates for all Americans--should be the standard by which all economic policies are judged. America can do better if we set ambitious, but reachable, growth goals for our country and then implement the policies necessary to achieve them.

Bob Dole believes the economy can grow at an annual rate of 3.5%. And he will implement a plan to achieve this goal.

The Clinton Record

Bill Clinton likes to claim we have the strongest economy in a generation. But economic growth has been anemic; and, if you accept the Clinton Administration's own projections, the economy will struggle along at 2.3% growth into the next century. (Source: Dr. J. Stiglitz, White House Press Briefing, July 18, 1996). Wages and incomes for working Americans are stagnant. Families are being squeezed by rising taxes. Businesses are choking on government regulation.

This is the fundamental reality of the Clinton economy--high taxes and stagnant wages. This is the key to middle-class anxiety. It is why people feel they are working harder, but falling further behind; why they believe the current generation won't be as successful as the last generation; why they believe their children will be worse off; why they feel so anxious about their economic future.

The Clinton Administration has accepted the notion that paltry growth is the best we can achieve. Under Bill Clinton, we have entered a new era of diminished expectations--an era when we are told that we can't even match the progress of the past, much less compete with the most dynamic economies in the world.

The central thesis of the Dole growth agenda is that America can do better. The story of America has been written by those who have set and achieved ambitious goals, not those who impose artificial limits on accomplishment.

The truth is, anemic rates of growth and stagnant wages are only inevitable if we continue to follow Bill Clinton's economic prescription of higher taxes, a refusal to balance the budget, and the over-regulation of the economy. The total tax burden is the highest in U.S. history. Federal, state, and local taxes consumed a record 31.3% of GDP last year. At the end of World War II, taxes consumed only 25% of GDP. The federal tax burden alone rose from 19.2% of GDP in 1992 to 20.5% today. (Source: National Center for Policy Analysis). The average middle-income family spends more of its budget to pay taxes than it does on food, clothing, and shelter combined. (Source: Joint Economic Committee)

By any historical measure of economic growth, America's economy is lagging. Economic growth under Bill Clinton has averaged 2.4% per year. That's slower than when he was elected in 1992 (3.7%); slower than the entire decade of the 1980s (3.2%); slower than the last five expansions (4.4%); and slower than what we've averaged over our entire post-World War II history (3.3%). (Source: Joint Economic Committee)

Productivity growth--the source of rising incomes--has been cut in half during the Clinton Presidency, falling from 1.2% per year from 1980 to 1992 to only 0.6% from 1993 to 1995. (Source: 1996 Economic Report of the President and the U.S. Department of Labor). The hard reality of slow productivity growth is stagnant wages and incomes that are squeezing working Americans. The average real pay--wages, salaries, and fringe benefits--of working Americans has stagnated under Bill Clinton. This is the first period of expansion in U.S. history when workers' pay has not risen.

SUMMARY

One of the central goals of Bob Dole's Presidency will be to stimulate greater economic growth. The goal is not just to restore America to its pre-Clinton rates of economic growth, but to achieve an even more ambitious growth path of 3.5% or higher, with price stability.

In sum, the six key points of Bob Dole's Pro-Growth Plan for America's Families are:

1. A Balanced Budget Amendment to the U.S. Constitution, to ensure that the budget stays balanced after 2002 and throughout the next century

2. A balanced budget by the year 2002

• Spending restraint is key to greater economic growth, which will preserve programs like Medicare, Medicaid, and Social Security. The line-item veto will be used to make sure we trim down and weed out wasteful government programs which retard economic growth.

3. Tax relief and fundamental tax reform

• Replace current tax system with one that is simpler, flatter and fairer
• Cut personal income tax rates
• Reduce the capital gains tax for individuals, including small business owners
• Create $500 per child tax credit
• Expand Individual Retirement Accounts and establish a spousal IRA
  • Repeal Bill Clinton's 1993 tax hike on Social Security recipients
  • Require a supermajority vote in Congress to raise income tax rates

4. "Ending the IRS as we know it"

• Establish one-year tax amnesty period as transition to new tax system
• Shift burden of proof in IRS audits from individuals to government
• End life-style audits (except in cases where there is clear evidence of criminal activity)
• Eliminate IRS filing for 40 million low- and middle-income taxpayers
• Require IRS employees to help taxpayers understand the law, not punish them for misapplying it
  

5. Education and Job Training Reform

• Promote educational choice through "Opportunity Scholarships for Children"
• Allow low- and middle-income students and parents to deduct interest on student loans
• Allow low- and middle-income parents to set up tax-free Education Investment Accounts, with contributions of up to $500 per child every year
• Allow workers to receive tax-free college tuition assistance from employers
• Increase workers' access to tax-free job search and placement assistance from their employers
• Consolidate job-training programs into single grant to the states. Encourage the states to experiment with vouchers and other innovative approaches to job training

.

6. Regulatory and Lawsuit Reform

• Require cost-benefit analysis for new major federal regulations
• Establish a regulatory sunsetting task force
• Review and re-evaluate regulations every 4 years
• Enforce Paperwork Reduction Act
• Reform joint and several liability
• Limit punitive damage awards
• Promote early settlement of claims
• Curb abuse of contingency fee representation
• Implement "auto choice" reforms

1. A BALANCED BUDGET AMENDMENT

One of the first priorities of a Dole Administration will be to secure Congressional passage and ratification of the Balanced Budget Amendment to the U.S. Constitution. Only the moral authority of the Constitution can force Washington to do what every American family must do: live within its means. Most states are required to balance their books. Bob Dole believes the federal government should be required to do so as well.

Only one man stands between the Balanced Budget Amendment and the American people--Bill Clinton. He has fought every effort to pass the Balanced Budget Amendment. Since Bill Clinton first took office, the Amendment has come up for a Congressional vote three times. Each time, he has led an all-out effort to defeat the Amendment. Six members of the President's own party, who had previously supported the Balanced Budget Amendment, switched their votes...thanks to Bill Clinton's efforts.

2. BALANCING THE BUDGET BY THE YEAR 2002

Balancing the federal budget is essential to increasing economic growth. In 1995, the federal government paid over $230 billion in interest on the national debt, or over 15% of all federal spending. Nearly 40 cents of every dollar the federal government collects in income taxes goes to pay interest on the national debt. (Source: The Economic and Budget Outlook: Fiscal Years 1997-2006, Congressional Budget Office, May 1996).

The federal deficit drives up interest rates and hits families. It is a "stealth tax" that every family with a home, every father and mother with a child in college, every young person who buys a car, must pay. Balancing the federal budget would cut interest rates by nearly 2%, and save the typical family:

• more than $36,000 on an average home mortgage;
• more than $1,400 on an ordinary student loan;
• nearly $700 on a typical car loan. (Source: Joint Economic Committee)

We simply cannot continue to mortgage America's future. If we continue current tax and spending policies, future generations will be saddled with an effective tax rate of over 80%. (Source: The Economic and Budget Outlook: Fiscal Years 1997-2006, Congressional Budget Office, May 1996).

Bob Dole's economic program will balance the budget by the year 2002. The following table illustrates how we will achieve this goal:

THE DOLE-KEMP PLAN: A BALANCED BUDGET AND TAX RELIEF
	Revenue	Offsets to
TAX RELIEF	Loss	Revenue Loss
Dole-Kemp Tax Plan	$548 Billion
GOVERNMENT SAVINGS
Tax relief already included in Congressional Balanced Budget Plan		$122 billion
Income Growth		$147 billion
Updating the CBO Baseline		$80 billion
Federal Spending Control*		$110 billion
FCC Spectrum Auction		$34 billion
Additional Savings and Reform Measures*		+$55 billion
TOTAL		$548 billion
TOTAL FEDERAL DEFICIT IN 2002		$0.00

*Does not include any reduction in Social Security, Medicare or Defense

3. TAX RELIEF AND FUNDAMENTAL TAX REFORM

There are two main problems with our current tax system. The American people are over-taxed. And our tax system is too burdensome, too complex, and too anti-growth. Bob Dole's Pro-Growth Plan For America's Families will address these two problems by:

First, providing immediate tax relief for every American taxpayer. The Dole tax relief plan contains the following provisions:

• Personal income tax rates will be lowered by 15% in three steps starting in 1997, providing tax relief across-the-board and reducing disincentives that hold back economic growth.
• Maximum capital gains taxes on individuals will be lowered to 14% to stimulate saving and investment. The capital gains tax rate will be 10.5% for those taxpayers in the 15% bracket.
• A $500 credit for every child under the age of 18 will be provided to low- and middle-income families, along with a new Education Investment Account with tax-free earnings for college education.
• An expansion of Individual Retirement Accounts and the establishment of a spousal IRA to remove disincentives to saving and investment. Provide tax-free incentives for job training and investing in education.
• Repeal of Bill Clinton's 1993 tax hike on Social Security benefits that hurts America's seniors.

The estimated effects on revenues over six years are as follows:

 

1997-2002 Total (Billions of Dollars)
Reduction in personal income tax rates	$ 406
Capital gains tax relief	$ 13
Child tax credit	$ 75
IRA expansion, education, training, and other incentives	$ 27
Repeal 1993 tax hike on Social Security benefits	+$27
Total	$ 548

Tax relief for every American taxpayer is step one. But a Dole Administration will not stop there. America's tax code discourages work, saving, and investment, encourages tax avoidance, and reduces the rewards for entrepreneurship--the true engine of economic growth. The complexity of our tax system wastes billions of hours in compliance and effort and--worst of all--convinces many Americans that the tax system has been hijacked by lawyers, accountants, and special interests, which it has.

The Clinton Administration is content with the status quo and has no intention of seriously reforming the current tax system. Treasury Secretary Robert Rubin recently told the Wall Street Journal: "There's nothing in the public domain we have found that's better than what we have." (6/7/96) Obviously, a second Clinton term promises no relief for taxpayers and no simplification of the tax code.

Senator Dole believes that restoring America to its full economic potential requires a fundamental overhaul of the tax system. He will repeal the current tax code and replace it with a new system that:

• Treats all Americans fairly by ending special-interest loopholes and taxing income at lower rates.
• Is simple enough so that most Americans can file their taxes on a form the size of a postcard or not have to file a return at all.
• Substantially reduces or eliminates the bias against savings and investment.
• Relieves the tax burden on working Americans by allowing for the deductibility of the payroll tax.
• Protects social security.
• Requires a supermajority of both chambers of Congress to raise income tax rates.

This new tax system, which is lower, flatter, fairer, simpler and more savings-oriented, will provide immediate tax relief to every taxpayer and stimulate economic growth now.

4. ENDING THE IRS AS WE KNOW IT

As the tax code has grown more complex and loophole-ridden, the Internal Revenue Service has grown more aggressive and more burdensome. The IRS today has more enforcement agents than the EPA, OSHA, FDA, and the Drug Enforcement Agency combined. (Source: Stephen Moore et al, "Ax the Tax," National Review, April 17, 1995). It is twice as big as the CIA and five times the size of the FBI. (Source: Report of the National Commission on Economic Growth and Tax Reform). The instruction booklet for the EZ form is 31 pages long. Taxpayers spend $190 billion and 6 billion man-hours each year to comply with the tax code. (Source: Joint Economic Committee)

It is simply wrong to have a tax system that is so complicated that 58 million taxpayers, 50% of all taxpayers who file, hire professional tax preparers to do their own returns. (Source: Joint Committee on Taxation)

Comprehensive tax reform--with dramatic simplification and a postcard return for most filers--is clearly the most effective way to end the abusive power of the IRS. There are other reforms which could be taken as well. A combination of the following reforms would allow us to cut the number of IRS bureaucrats by 30% by 1999.

• Establish a one-year tax amnesty period as part of a transition to a new tax system. Individuals would be permitted to pay back taxes without penalty or interest charges.
• Shift the burden of proof in IRS audits from the individual to the federal government. Americans who are audited are currently presumed guilty until they prove themselves innocent. This should be reversed.
• End life-style audits (except in cases where there is clear evidence of criminal activity). A life-style audit is the practice whereby the IRS requires taxpayers to document their style of living in minute detail to determine whether their reported income is sufficient to support that lifestyle. Under this type of audit, taxpayers can be questioned about a wide range of personal subjects--from how often they go out to dinner, to where they spent their summer vacation, to which school their children attend.
• Eliminate IRS filing for 40 million low- and middle-income taxpayers. Taxpayers with only wage income and less than $250 in investment income would no longer be required to file a tax return. All of their taxes would be collected through withholding.
• Shift IRS personnel and resources to the front-end of the tax filing process rather than the back-end. IRS employees should be dedicated to helping American taxpayers file their returns correctly, not simply waiting until they make a mistake and then pouncing on them with an audit. The IRS should be on the side of the taxpayer--helping individuals comply with the law, not just punishing them for being unable to figure out an incomprehensible tax system.

5. EDUCATION AND JOB TRAINING REFORM

As we enter a new century, it is obvious that the opportunities of tomorrow will be created in America's classrooms and science labs. Education is the single greatest force for improving opportunity from one generation to the next. The value of education, training, and other human capital is no less important than that of machines and other physical capital.

The American people know how to build a world-class educational system. We built one once before. It rested upon a solid foundation of parents and teachers who exercised direct control over grade schools and high schools. It rested upon colleges and universities that are the envy of the world, but were affordable to all Americans. It rested upon working men and women who learned new skills and climbed up the economic ladder, for themselves and their children.

Today, education has instead become a bloated monument to political influence and the status quo. All too often, our schools are dangerous and demoralizing places. The price tag of a college education has risen astronomically in recent decades, beyond the reach of too many families. Employers are discouraged by the tax system from providing education and job training assistance to their employees. A maze of federal job training programs, designed with the best of intentions to give more Americans a first or second chance, does not teach workers the skills they need for the modern workplace.

Bob Dole will help increase long-term economic growth and opportunity by encouraging choice, quality, and access to education and training--for grade school and high school kids, for students in college and other post-secondary institutions, for working Americans, and for those laid off or unemployed. Bob Dole will:

• Establish a four-year, $3 billion demonstration program to provide Opportunity Scholarships worth at least $1,000 for elementary school students and $1,500 for high school students from low- and middle-income families, to attend any accredited school--public, private, or religious--that chooses to participate. The federal funds for the Opportunity Scholarships will be matched each year by $3 billion in state funds. These scholarships will help give millions of low- and middle-income families the financial ability to choose the best schools for their children.
• Allow low- and middle-income parents and students to deduct the interest they pay on student loans for post-secondary school education.
• Allow low- and middle-income parents to establish Education Investment Accounts for their children up to the age of 18. The $500 per child tax credit or other funds may be placed into these accounts, up to a limit of $500 per child per year. As with IRAs, accumulated earnings on these accounts will be tax-free if funds are left in the account for at least five years. Money may be withdrawn from these accounts to pay for tuition, fees, books, computers, and other expenses at an accredited college, university, or other post-secondary institution of higher learning.
• Allow workers to receive tax-free college, graduate, or post-graduate tuition assistance from employers, by permanently reinstating Section 127 of the Internal Revenue Code. Employers should be encouraged to provide tax-free educational benefits to their employees without the involvement of wasteful government bureaucracies. These educational benefits will provide more workers with the skills and learning they need to take full advantage of the many new opportunities of today's economy.
• Increase workers' access to tax-free job search and placement assistance from their employers to find another job or prepare for a new trade or business. This proposal will expand the tax-free outplacement assistance rule. Under the current rule, employees receive a tax break on such assistance only if the assistance is to find a similar job and cash payment is not offered as an alternative to the assistance. The new rule will allow employers to provide assistance on a tax-free basis even if a) the assistance helps prepare the employee for a job in a new trade or business or helps the employee start his or her own business, and/or b) a cash payment is offered as an alternative to assistance.
• Consolidate more than 80 federal job training, vocational education, and adult education programs into a single grant to the states. We now spend more than $5 billion a year, with no accountability, and studies show these programs are not helping people. The current system is confusing, redundant, ineffective, and expensive. The bottom line is that the current federal job training maze does not teach the skills workers need for the modern workplace. States must have flexibility to experiment with innovative approaches like vouchers that workers can use to purchase the training they need from private training firms, schools, and community colleges.

   

6. REGULATORY AND LAWSUIT REFORM

Regulatory Relief

Washington rules, Washington regulations, and Washington red tape are strangling the American economy and lowering its economic growth rate. An estimated $1.3 trillion of economic activity is lost each year due to government regulations. (Source: Center for the Study of American Business). That means fewer new jobs and less take-home pay for America's families.

President Clinton's own Administration has estimated that the cost of complying with federal regulations was at least $668 billion in 1995, a figure larger than the entire personal income tax for the same year. This is more than $6,000 per household. By the year 2000, these figures are expected to rise to almost $721 billion, or $7,000 per household. In other words, even if no new federal regulations are imposed, the "regulatory tax" on each American family from regulations already on the books will increase by $1,000 over the next four years. (Source: U.S. Small Business Administration)

President Clinton has opposed real regulatory reform. Just look at the facts: He opposed and threatened to veto the Comprehensive Regulatory Reform Act of 1995, which would have required cost-benefit and risk assessment analysis of new federal regulations. He vetoed regulatory reform in late 1995 as part of legislation to increase the debt ceiling. His "Reinventing Government" program mainly looked at internal agency rules, not those rules that burden individuals and private business.

His Administration has failed to enforce the Paperwork Reduction Act, which requires federal agencies to set a goal of at least a 10% reduction of the paperwork burden. A Government Accounting Office study estimates that the Clinton Administration will achieve at most a 1% reduction in FY 1996. His Administration even exempted the IRS from the Act by a ruling of the OMB. In a June 1996 report GAO stated that since 1989, "the IRS's paperwork burden has accounted for more than three quarters of the government-wide total."

As President, Bob Dole will return sanity and common sense to federal regulations. He will eliminate the unnecessary rules and regulations, the red tape and bureaucracy that come out of Washington. He will free our economy to create more jobs and opportunity for all Americans. Bob Dole will:

• Require that benefits justify the costs for all new major federal regulations, using independent peer-review, sound science and risk assessment. Individuals and businesses will be able to take agencies to court if the agencies ignore this requirement.
• Require all new federal regulations to be reviewed and re-evaluated every four years. Rules that make sense for the problems of today should not become set in stone and act as barriers to growth tomorrow.
• Establish a regulatory sunsetting task force, co-chaired by the Director of the Office of Management and Budget and the head of the Small Business Administration, answering directly to the President, to evaluate all existing federal regulations and recommend the elimination of regulations that are out-dated, ineffective, or not cost-effective.
• Enforce the Paperwork Reduction Act to relieve Americans of the regulatory paperwork burden. Rescind the Clinton exemption that allows the IRS to avoid compliance with this act.

Common-Sense Legal Reform

Bob Dole understands that the American people deserve a legal system that protects the rights of the injured and the pocketbooks of consumers from the greed and influence of trial lawyers.

Abuse of the legal system impedes economic growth and hurts small businesses, limits work opportunities for those seeking jobs, and damages the competitiveness of American companies. The cost to the American people is staggering: by one estimate, lawsuit abuse imposes an effective "litigation tax" of $132 billion per year on the U.S. economy. (Source: Tillinghast, Nelson, & Warren). Lawyers must be made to realize that our nation's legal system is designed to make the injured whole, not to make trial lawyers rich.

The current system encourages lawsuit abuse. Outrageous punitive damage awards--such as the $2.7 million one person was originally awarded after spilling McDonald's coffee on herself--encourage the "go-for-broke" mentality of trial lawyers, and drive up costs for consumers. The rule of joint and several liability--under which a defendant can be held responsible for 100% of the damages, even if he or she is only 1% at fault--gives trial lawyers an incentive to sue everyone in sight.

The trial lawyers, one of the richest and most powerful special interest lobbies in America, have an enormous stake in maintaining the status quo: they rake in an astonishing one-third or more of damages recovered in tort cases, reducing the amount received by injured parties. Consumers are hurt as well: the average American family pays an extra $200 per year in insurance premiums to make up for phony claims. (Source: National Insurance Crime Bureau)

President Clinton is clearly the trial lawyers' candidate of choice, and for good reason. Mr. Clinton has consistently put trial lawyers ahead of consumers, workers, and businesses large and small--most recently by vetoing both product liability and securities litigation reform.

As President, Bob Dole will fight for common-sense legal reform that promotes job opportunity and economic growth far into the future--and makes the power of the trial lawyer lobby a thing of the past. Bob Dole will:

• Limit punitive damages to $250,000 or three times economic damages, whichever is greater, except in cases involving death, serious injury, alcohol or drug use, criminal misconduct, or civil rights violations. This limit will apply in all civil cases--not just product liability cases. Among the many groups this reform will protect are volunteer organizations.
• Abolish joint and several liability for non-economic damages in all civil cases. Each actor in a lawsuit should be held liable only for his or her fair share of the problem. This reform will help remove the incentive of trial lawyers to drag every possible individual or business into a lawsuit.
• Promote early settlement of claims and reduce lawyers' incentives to litigate by allowing a defendant to make an "early offer"--within 120 days--to compensate a plaintiff for all economic damages, including medical costs and lost income. The plaintiff may reject the offer and pursue the lawsuit. But in that case, he or she may only recover non-economic damages, including punitive damages, where there is clear and convincing proof that defendant's conduct was caused by intentional or wanton misconduct. States will be able to opt out of this reform.
• Ensure that money recovered in settlements goes to those who were injured, not their lawyers, by curbing the abuse of contingency fee representation. Where a defendant offers an acceptable settlement, the plaintiff's lawyer may collect an hourly rate but not a contingency fee. If the settlement offer is rejected, the plaintiff's lawyer will only be able to collect a contingency fee for an amount awarded by a judge or jury that exceeds the original offer. States will be able to opt out of this reform.
• Work to implement a system of "auto choice," which would let car owners choose the kind of insurance coverage that best suits their needs--either a more expensive policy that covers both economic damages and pain and suffering, or a cheaper policy that covers economic damages only. Any economic damages not covered in the latter policy could be recovered from a negligent driver. Damages for pain and suffering would be available in cases involving gross negligence or alcohol and drug abuse. By one estimate, auto choice could reduce an average driver's yearly insurance premiums by 29% or $221 per car. States will be able to opt out of this reform.

CONCLUSION

More growth, more opportunity, higher wages, less government, lower taxes. Bob Dole's Pro-Growth Plan is the right plan for restoring the American Dream.

Each of Bob Dole's initiatives will help fuel the economic growth and opportunity that are our birthright as a people. Each of these initiatives draws on the simple proposition that the American people, not government, are the true guardians of our freedom and prosperity. This is the vision that inspired our Founding Fathers when they declared, with proud courage, that all men "are endowed by their Creator with certain inalienable Rights, that among these are Life, Liberty, and the pursuit of Happiness." We must believe in the power of freedom. We must believe in ourselves. We must once again seize the opportunities before us as America enters the 21st century.