Gov. Dukakis Assesses The National Economy

In his first address on the United States economy since the stock market collapse, democratic presidential candidate Gov. Michael S. Dukakis said the government must make Americans pay sufficient tax bills, by increased enforcement and, if necessary, by higher taxes.

Speaking to an overflow audience that spread to other rooms at the Law School, the Massachusetts governor cited last week's stock market crash as proof that the national economy needs the same kind of treatment that he said produced the Massachusetts "economic miracle."

"Nine days ago, on Black Monday, our national alarm clock went off. Loud and clear. This wasn't simply a correction in the stock market; it was an earthquake," he said.

Dukakis said the nation is in "a period of great uncertainty and danger, but also a time of great opportunity." He offered a plan for economic growth and opportunity similar to his policies in Massachusetts.

When the governor first took office in 1975, unemployment in the state was at 12 percent, the second highest in the nation, and the deficit was a record $500 million. State figures showed that unemployment was down to 3.8 percent last year and a $200 million surplus had replaced the deficit.

Dukakis credits his "E.T." (Education and Training-Choices) program and active revenue collection policies as major reasons for the state's economic boom.

He compared this record with that of President Reagan, who he said has exacerbated the nation's economic predicament. "Six years ago, the White House proposed, and Congress approved, the biggest revenue cut and thebiggest Pentagon build-up in our history, whilepromising to balance the budget by 1985," he said.

"The result? A dollar over-valued by 40percent; a 40 percent tax on all exports; a 40percent discount on all imports, [and] a nationaldebt of two trillion dollars," Dukakis said.

The governor slighted the "high priests ofReaganomics" who he said has sought to restoreprosperity in the country by cutting urbandevelopment grants, cutting federal aid toeducation and reducing employment and trainingprograms.

Saying he wanted to reverse this trend, Dukakiscalled for a multi-year agreement with credible,workable budget targets, and suggested a nationaltax collection plan similiar to the one thatcaptured almost $3 billion in revenues forMassachusetts in four years.

"I worked with my legislature and RevenueDepartment to put together a tough visible andvery successful revenue enforcement program. Thesame kind of program we need in Washington."

He said only 81 percent of Americans pay theirtaxes, leaving a gap of $110 billion inuncollected revenue. In the early 1990's, he said,the tax gap will be about $200 billion.

"That's not legal. It's dumb fiscal policy. Andit's just not fair to the vast majority ofAmericans who pay their taxes in full and ontime," Dukakis said.

While the governor does not support tax hikes,he said he could not rule out the possibility. "Wemay have to raise taxes...[but] let's go afterthose who aren't already paying."

Dukakis also recommended improving the economyby cutting spending. He said "the days of theblank-check defense budget are over," and thegovernment must make tough cuts in militaryspending.

He attacked Reagan's Strategic DefenseInitiative, calling it a costly fantasy, and saidthe nation should strenghten its conventionaldefense capabilities before investing in a $50billion program for the Midgetman missle.

Dukakis also came out againstGramm-Rudman--which calls for across the boardcuts--arbitrary cuts, and what he called "phonyconstitutional amendments" to balance the budget.

Instead, he suggested making selective cuts andreallocating funds to maximize the benefits ofremaining programs