Broadcast June 7, 2001
Presidents are lucky if they accomplish one big thing in a term of office. The American political system is designed to make even one big thing difficult to get done, especially if there's no economic or foreign crisis to coral public support. President Bush has already got done one very big thing -- a tax cut of large proportion, approximately the size of the cut he campaigned on.
Democrats complain that we can't afford it -- that the cut is fiscally irresponsible because it will create deficits if the President tries to do the other things he s promised, like upgrading the military, and paying the costs of privatizing Social Security, while at the same time preserving Medicare and giving a prescription drug benefit.
But the complaint "we can t afford it" is easily countered by the supply-side mantra that tax cuts, especially for the well-to-do, will lead to greater economic growth, because people who can keep more of their earnings will have a grater incentive to work hard and innovate. To be sure, a supply-side tax cut was tried in 1981, and it produced huge budget deficits -- $200 billion as far as the eye could see, in the immortal words of David Stockman, Ronald Reagan's budget director. But the new Bush team believes history will not repeat itself.
The other complaint is that most of the dollar benefits of this tax cut go to people who are already wealthy -- who came out big winners in the 1990's boom -- while the tax cut will do very little to help most working people, whose incomes haven't risen very much. And yet higher-income people pay most income taxes, so if you think about the tax cut as returning the surplus dollars to people who forked them over in the first place, you might not worry too much about the cuts rich beneficiaries.
What we don t hear is the real problem with the tax cut. Even if it generates more economic growth over the long term, it will still make it virtually impossible for this nation to pay for several things that a lot of working people need in the years ahead -- like affordable heath care, safe and stimulating child care, excellent schools for all our kids, and long-term care for the elderly.
In other words, the tax cut takes off the table what many people consider the nation s great unfinished agenda.
On the other hand, if you don't believe government could or should even try to accomplish these sorts of goals anyway, then the tax cut guarantees it won't.
In any event, this is the debate we should have had about this tax cut. And it s a debate we may still have in years to come. After all, most of the cuts go into effect years from now, and a future Congress could decide to repeal them.