It's been a bad time to keep a job, especially if you're Paul O'Neill, Cardinal Law, Trent Lott, or even Al Gore. Until last Sunday, Gore's job was to run for president of the United States -- which in this era of permanent campaigning is a full-time occupation. Gore's decision not to run opens the door to almost any Democrat who might want to step in. Having a large bevvy of Democratic candidates may be good for the Democrats but not necessarily good for the economy.
Let me explain: If you hadn't noticed, the economy is still stuck in the doldrums despite recent cheerleading from Wall Street. Unemployment is inching upward, as are oil prices, and consumer confidence is trending downward. A few weeks from now, President Bush will unveil his new plan for getting the economymoving. His reburbished economic team is just window-dressing for the plan he'salready decided on. That's to make last year's $1.35 trillion tax cut permanent, and add $300 billion more in tax breaks for investors and businesses.
It's a fine plan if you believe in trickle-down economics and tooth fairies. But the American economy is suffering from overcapacity right now -- too much supply and too little demand -- which means that tax breaks for investors and businesses are beside the point. No one in their right mind will invest in morecapacity. I mean, interest rates are already nearly zero and businesses won't invest. Extending last year's tax cut beyond the year 2010 will have no effect on this economy. It will only increase the budget deficit over the long term, while richly rewarding the already rich.
What the economy needs most now is a boost in consumer spending. That requires more money in the pockets of more consumers. And the best way to do this right away is to cut the payroll tax. Four out of 5 Americans pay more in payroll taxes than they do in income taxes. Finance a payroll tax holiday now by repealing the Bush tax cut after 2004 for top earners.
You may disagree with me about this. But at least let's have a vigorous debate.
And that's my point, really. We're not going to have a debate about economic policy, because even though the White House knows what it wants to do, Democrats are all over the lot, and I don't mean Trent. Some, like Connecticut Senator and presidential hopeful Joe Lieberman, seem more concerned about avoiding any deficit spending than stimulating the economy. At the other extreme are the 12 Senate Democrats who voted for the original Bush tax cut, some of whom will want to make it permanent. And not even minority leader Tom Dashle, another potential presidential hopeful, has been willing or able to keep these Democrats in line. So far, only Massachusetts Senator John Kerry hasendorsed a payroll tax holiday.
Democrats rarely speak with one voice, of course. But With Al Gore out, and more Democratic hopefuls appearing every day, there's even less likelihood of aclear Democratic alternative. And that means Bush's economic plan, wrongheaded as it is, will be the only economic plan we have.
