Shaping the cut

President George Bush recently displayed three American families who would benefit from his tax-cut plan as he began to push the plan through Congress. There isn’t a platform in the world large enough to hold the number of people eager to describe how to better deliver the tax cut to those model families and everyone else. But three sources of advice stand out as particularly sensible and should be supported in Congress by Maine’s delegation.

. From Alan Greenspan: Tie future tax cuts to actual economic performance, measured by federal revenues. The president’s proposal is based on a projected surplus of $5.6 trillion over the next 10 years, according to the Congressional Budget Office. If those surpluses do not appear, the tax cuts in future years should be adjusted to ensure they are not carried out through deficit spending. Sens. Olympia Snowe and George Voinovich have urged the president to support this idea.

. From Robert Rubin, former secretary of the Treasury: The $2 trillion plan – $1.6 trillion tax cut plus $400 billion of interest on the national debt that would otherwise have been retired – will use up all available surplus, leaving nothing for any new programs from prescription drug benefits to a missile defense system. That’s because the CBO’s estimate of $5.6 trillion includes Social Security and Medicare surpluses, money that Congress either wants to put in a “lock box” to protect or will be needed soon after the end of the 10-year tax plan. It was fiscal discipline of paying down the debt that helped bring the nation its longest economic expansion in history; abandoning that principle now “could increase interest rates and recreate the loss of consumer and business confidence associated with the deficits of the late ’80s and early ’90s.” Reduce the size of tax cut.

. From nearly everyone with a calculator: Forget cuts in income or estate taxes, if you really want to help those families, cut the payroll tax. Using funds generated by income taxes, Congress could protect Social Security and Medicare while cutting the taxes that most affect middle and lower income Americans. A front-loaded, short-term cut in those taxes to the people most likely to spend would do more for the typical American family than the cut proposed by the president – which emphasizes a cut for the wealthy – while helping the economy and indirectly supporting the investments of the well-heeled. President Bush has indicated that he is open to including this cut in the mix.

The responsibility in the tax-cut debate of Sens. Snowe and Susan Collins and Reps. John Baldacci and Tom Allen is to see that the best interests of Maine taxpayers are vigorously represented. Here are three ways they can accomplish this.