President Bush's latest push to reduce taxes reflects a
Republican approach to managing the economy that echoes Ronald
Reagan more than his father: Stimulate the economy first and
deficits will take care of themselves later.
Indeed, the idea of balancing the federal budget may today be
farther down the list of Washington's priorities than at any time in
In part this is due to the nation's circumstances. Terrorism, not
red ink, appears the biggest threat to US security. Few experts
judge that current deficits pose much of an economic threat.
But a marked decline in the 1990s political consensus on the need
for austerity has also played a role. Mr. Bush is advocating tax
cuts to fix the economy, while Democrats appear divided and
unwilling to position themselves as the party of fiscal prudence.
"Once you have a legitimate reason to [unbalance the budget] it
becomes very easy to lose fiscal discipline altogether," says Robert
Bixby, head of the Concord Coalition, a group that promotes a
It has become incresingly clear in recent days that on money
matters George W. Bush is literally not his father's kind of
Republican. The elder Bush once denounced Reagan-style fiscal
policies as "voodoo economics." Given a choice between raising taxes
or allowing the deficit to increase during his own presidency, he
chose the former.
But earlier this month, his son espoused one of the central
premises of Reagan's supply-side economics: that tax cuts actually
increase government revenue, by stimulating the economy.
Asked about this year's deficit of $159 billion after a Cabinet
meeting, Bush insisted that his big tax cut of last year was not
responsible for the red ink.
"The deficit would have been bigger without the tax-relief
package," he said.
The administration is pushing to make permanent those aspects of
its tax package which are set to expire. Its solution to the
stumbling economy is in part a new package of tax cuts, perhaps to
include a reduction in the corporate income tax rate. Treasury
Secretary Paul O'Neill has even put together an internal group to
mull major tax-code revisions.
Contrast this behavior with that of former GOP presidential
nominee Bob Dole. As a Senator Dole was once denounced by a member
of his own party, Rep. Newt Gingrich, as a "tax collector for the
welfare state" for suggesting increased revenue enhancements.
Congressional Democrats, for their part, are quick to blame tax
cuts as a major reason for the current run of red ink. But few are
willing to call directly for tax-cut repeal. And in the meantime,
many in the party are busy promoting more spending on prescription
drugs for the elderly and other social programs. …