(IBD) Obama Should Return To Clinton/Gingrich-Era Spending Levels, Not Tax Rates

[Daniel John Sobieski]

Fiscal Policy: Talk of Clinton-era tax rates ignores the fact that the  former president, working with a GOP Congress, cut spending as a share of GDP  and produced four balanced budgets by focusing on growth, not spending.

Even as he pushes $150 billion in new "stimulus" spending, President Obama  argues that to avoid the fiscal cliff we must return to Clinton-era tax rates  for wealthy households, with a top marginal rate of 39.6% vs. the Bush-era 35%.  Clinton's was an age of balanced budgets and economic growth.

But it was also an era of budgetary restraint in which both parties, not just  the GOP, still produced budgets.

It was one, too, in which a Republican Congress led by House Speaker Newt  Gingrich produced welfare reform, killed the precursor to cap and trade — Bill  Clinton's BTU tax — and stopped ObamaCare's predecessor, HillaryCare, dead in  its tracks.

As the Cato Institute's Steve H. Hanke points out, when President Clinton  took office in 1993, government expenditures were 22.1% of GDP. When he departed  in 2000, the federal government's share of the economy had been squeezed to a  low of 18.2%, a decline of 3.9 percentage points. No other modern president has  even come close (see table).

Under Clinton, federal spending averaged 19.8% of GDP. In contrast, spending  under Obama over the past four years has averaged 24.4% of GDP.

Revenues from Clinton-era tax rates were actually used to pay down the  national debt and produce four successive budget surpluses. Obama's tax  increases will simply fund new spending.

Read More At IBD:  http://news.investors.com/ibd-editorials/120312-635563-clinton-era-...