The Taxonomist

Sooner than anyone imagined only a few
months ago, the inevitable conflict between the Bush tax cuts and public
programs has come to a head.

In January the Congressional Budget Office told us to expect
hundreds of billions of dollars in budget surpluses over the next five years,
beyond the buildup in the Social Security and Medicare trust funds. But now the
CBO and the White House agree that those surpluses will not exist. Instead,
they predict $160 billion to $200 billion in deficits outside of the trust funds
from 2001 to 2005--and the actual shortfall is likely to be considerably higher.
Notably, most of the blame, says the CBO, goes not to the sagging economy but
to Bush's tax cuts.

Democrats are in gleeful "I told you so" mode over the recent budget
developments. Bush's speech in February pledging that we could have it all--lower
taxes, expanded spending, and real debt reduction--was a tour de force. But now
that his promise is revealed as a lie, Democrats see an opportunity to show the
public the nasty trade-offs that the Bush tax cuts actually entail.

Meanwhile, Republicans in Congress--who invented the term "Republican Social
Security Lockbox" and voted overwhelmingly to put Medicare off-limits as
well--are, as Democratic Senator Kent Conrad of North Dakota puts it, in "deep
denial." House Budget Committee Chairman Jim Nussle, an Iowa Republican, tries to
put on a happy face: "The polls show that Republicans are being blamed for the
fact that there is no surplus left. Thank goodness... . Getting that money out of
town was the most significant thing we've done." But he then insists, against all
evidence: "We're not going into any trust fund. The trust fund is totally
secure."

The attack dogs at the Republican National Committee have hit the Big Lie
trifecta, boldly announcing an "Honesty Campaign," with a Web site called
ProtectSocialSecurity.com and a television ad claiming that Bush "has protected
every penny of Social Security and Medicare."

Right-wing think tanks and commentators--along with the White House, to some
degree--are taking a different tack, pushing the line that the Social Security
and Medicare trust funds are "a meaningless fiction." Charles Krauthammer, for
instance, recently wrote: "You would have thought that after Al Gore's
hilariously hyperbolic 'lockbox' claims in the presidential debates, the idea
would never be taken seriously again"--a comment showing that Krauthammer
confuses not just "hyperbolic" with "annoyingly repetitive" but the fact that
Gore didn't come up with the "lockbox" term: He purloined it from the GOP.

Good luck on persuading the public that the trust funds are "meaningless." (In
a future column: more on why the trust funds are real assets that make a big
difference to the future of Social Security and Medicare.)

Of course, given the less-than-rosy state of the economy, we should probably
be happy about a little deficit-spending stimulus this year. But the outlook for
the future looks bleak unless the remaining phase-ins of the Bush tax cuts are
repealed or sharply scaled back. If that's going to happen, then the public needs
to understand the enormous downside of the tax cuts for the vast majority of
Americans.

President Bush blithely declares himself pleased with the way the upcoming
political fight is shaping up, arguing that the voters will prefer the continued
phasing-in of his tax cuts--more than half of which are targeted to the best-off
1 percent of the taxpayers--to devoting those funds to things like education,
prescription drugs, and shoring up Social Security. Democrats, bolstered by
polls, think just the opposite. So let the games begin!

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