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.
If I understand Max correctly, our main points of disagreement seem to be the following:
A couple of times, he challenges the truism that paying off debt now will make it easier for future taxpayers to maintain or enhance public programs--just as Reagan's big debt buildup in the 1980s made it harder to maintain public spending thereafter. But to his credit, he quickly backs off this indefensible assertion, so I'm not going to restate the obvious.
As the country gears up for an intensified battle against
terrorism and the economy slips into recession, almost everyone in Washington is
looking for ways to provide as much economic stimulus as possible while still
preserving long-term fiscal responsibility. Everyone, that is, except
congressional Republican leaders, who are calling for just the opposite.
In a weird display of Bizarro World economics, Senate Minority Leader Trent
Lott and House Majority Leader Dick Armey have proposed what they characterize as
a two-year, temporary revenue increase--to be followed by a much larger revenue
During the House debate in early March on the first round of the Bush tax cuts, Majority Whip Tom DeLay of Texas stood up on the House floor and tried to revise history. "Mr. Speaker," said DeLay, "I have to say, that the Democrat leadership has no credibility when it comes to fiscal responsibility. They are the ones that were in charge and who drove up the debt. They point to Reaganomics as the reason for the debt going up, but what they do not point out is that ... the Democrat-controlled House drove spending up... . It is spending, stupid. It is spending that creates the deficit."
Well, that's an interesting fable. But it has nothing to do with what really happened back in the 1980s.
By the time you read this, we may have a new balance of power in Washington. If Democrats have the upper hand, we can worry that they'll continue the Clinton-Gore push to make the tax code more complicated--albeit a bit more progressive, too. If the Republicans are in the driver's seat, then it appears that tax cuts targeted to the rich will be at the top of the agenda.
Neither vision is attractive to those of us who believe in a fair, straightforward tax system. But whichever party is in charge, perhaps it can be persuaded to amend the details of its presidential candidate's campaign tax promises without sacrificing the basic themes.