November 27, 2024
Editorial

Tax week

This is tax week for President Bush, a final push of campaign-style events aimed at average Americans that will culminate Wednesday with a reunion of the “tax families” who joined him at election rallies. Call it hokey, but it’s working – the $1.6 trillion tax cut plan he submits to Congress on Thursday already has an inevitability to it that has even its sternest asking not “whether” but “how much.”

It’s a remarkable change from the election campaign, when polls showed the public fairly ambivalent toward a major, across-the-board tax cut and the pundits asserted that Candidate Bush was not really married to the idea, that political realities would force a major reassessment. Events beyond Mr. Bush’s control created the opportunity for this change, but considerable credit must be given to his rather deft ability to seize that opportunity.

The biggest change is the clear evidence that the economy is cooling. The pre-election arguing about rate of growth has given way to arguing about how soft the landing can be made to be. The real-world signs of slump – layoffs, poor investment performance – combined nicely with revised projections of a surplus booming upward. The specter of working Americans struggling while Congress hoards excess revenue was too much for the staunch tax-cut critic Alan Greenspan to ignore; Democrats in Congress, too, are being swept along.

The issue now facing Congress, will be keeping the tax cut at $1.6 trillion. The 10-year plan takes a lot for granted, as 10-year plans always do, and this Congress must be careful to preserve the ability of future Congresses to response to the unforeseen. In his guarded assessment of the president’s program and its likely success, Senate Democratic Leader Tom Daschle properly caution his colleagues to remember 1981.

That, of course, was President Reagan’s first year in office and his time to make good on his main campaign pledge of a major tax cut. Then, as now, Democrats were weary of being labeled the tax-and-spend party and, as a result of both parties insisting on getting their favored tax cuts – across-the-board for Republicans, targeted for Democrats – the total package ended up being nearly double what President Reagan proposed. Failure to cut spending, an economic downturn and the result was a soaring deficit just now being brought under control.

There are signs that the same bidding up has begun. President Bush’s proposal is for cuts in individual income taxes; already some, especially in his own party, are talking of including corporate tax breaks and enhanced depreciation allowances that would push the package up to $2 trillion. Such tax cuts may be defensible, they may even be desirable, but they must stand on their own. During the campaign, Mr. Bush talked about helping working families. His own party can help him immeasurably by, for now at least, keeping it to that.


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