The Dole-Kemp Plan: Why It's Needed

The major problem with the current economy is its anemic rate of growth--growth that does little to increase real household incomes. Although median household income increased in 1995 over 1994, it's still below the 1989 peak; and it actually declined in 21 states.

At the rates of growth projected by the Clinton administration, it will take 55 years for real per capita income to double. It used to happen in a generation. It can again.

What We Can Do

There's no reason to accept the anemic rate of growth the Clinton administration forecasts into the indefinite future.

We can do better, and that's what the Dole-Kemp plan is all about.

American workers can earn more.
We can increase job opportunities for people with low or moderate incomes.
We can restore the hope that the next generation will do better than their parents.
We can make it easier to finance the social security system.
We can produce more goods and services.
We can reduce job insecurity and job lock.
We can make America a safer place to live.

So a program that promotes economic growth is the most important thing we can do for our future.

In addition to slow growth, a variety of indicators suggest that the economy may be slowing down--to a growth rate under 2 percent--in spite of the good second quarter.

Earnings of full-time workers, both men and women, declined between 1994 and 1995--so the improvement in household income is a result of more people in a household working, or working at more than one job, rather than an increase in real wages.

August 1996 orders for durable goods declined 3.1 percent.

New claims for unemployment benefits have risen six out of eight recent weeks, and in September unemployment rose to 5.2 percent.

Consumer debt is at a record 20.8 percent of income as of June 1996, and Merrill-Lynch expects spending to slow as a consequence; increased delinquences have caused lenders to tighten up on standards. 54 percent of consumers are finding it tougher to pay their bills than it was three years ago.

Most interest rates--the prime rate, the federal funds rate, rates on Treasury notes, car loans, and adjustable-rate mortgages--are higher than they were when Clinton took office.

Annelise Anderson
Senior Research Fellow
The Hoover Institution
Economic Adviser, Dole-Kemp '96
andrsn@andrsn.stanford.edu