- The Washington Times - Tuesday, February 6, 2001

Liberal naysayers have sought to eviscerate President Bush's broad tax cut plan since before he was inaugurated. Their criticisms of it are five: it is fiscally irresponsible, a weakening economy may undo economic projections, it would take too long to affect the economy, it is unfair to the poor and it is partisan politics. On inspection none of these points holds true. What is true is that the same people making these charges are the same liberals who opposed the Bush plan earlier and every congressional Republican tax cut plan over the last five years.

What liberals are continuing to do is try to create an elaborate mechanism whereby any tax cut is unacceptable which is not in reality thinly disguised spending. Despite this, Mr. Bush's tax cut remains the best use of the next decade's federal budget surplus.

From the beginning, Mr. Bush's $1.3 trillion tax cut was fiscally do-able. Last summer, the Congressional Budget Office projected a $4.6 trillion total federal budget surplus from 2001-2010. Even without counting Social Security's surplus,the remaining budget surplus totals $2.2 trillion a full $600 billion cushion, even if the tax cut's projected $300 billion debt service cost is included.

In December, the Clinton administration increased the non-Social Security surplus estimate to $2.5 trillion from 2002-2011. On Wednesday, CBO increased it yet again. According to CBO, even factoring in over the next 10 years the spending Bill Clinton wrested from Congress at 2000's conclusion, the total budget surplus will be $5.6 trillion and the non-Social Security surplus will be $3.1 trillion from 2002-2011.

But could factoring in a weakening economy undercut the size of the surpluses? It should be remembered that CBO's new 10-year economic assumptions remain relatively conservative just 2.4% real GDP growth for next year and just 3.1% from 2003-2011 (which equals the lowest real growth since 1995). It is therefore unlikely that CBO should need to scale back its long-term economic growth projections due to any current economic slowdown.

In sum, Mr. Bush's tax cut amounted to less than 40% of the total budget surplus last summer and just 29% of the total surplus (52% of the non-Social Security surplus) now. So big are the surpluses now, that fiscal irresponsibility would only come from not cutting taxes as Mr. Bush proposes.

These new estimates embody Federal Reserve Board chairman Alan Greenspan's testimony before the Senate Budget Committee on January 25. Dealing a further blow to liberals' tax cut opposition, Mr. Greenspan called for a fundamental change in budget perception to one that assumed "the glide path to zero federal debt."

As for the remaining surpluses: "if long-term fiscal stability is the criterion, it is far better, in my judgement, that the surpluses be lowered by tax reductions than by spending increases." Would Mr. Bush's tax cut take too long to have an effect on the economy? No. The economy is greatly influenced by expectations of future conditions. A case in point was the stock market rally that immediately followed the Federal Reserve Board's interest rate cut on January 2, even though none of the rate reduction had yet been felt. The message of a Bush tax cut that taxpayers will retain more of what they earn and that government will take less of it would have an immediate as well as a long-term effect.

Would Mr. Bush's tax cut be unfair as Al Gore speciously claimed during the campaign? Hardly. How can it be unfair to return only the non-Social Security surplus to income taxpayers in direct proportion to the amount of the taxes they paid? It is the same money, going to the same individuals, but in a less progressive proportion than it was sent to Washington in the first place. If rebates (which is what Mr. Bush's income tax cut effectively is in a time of budget surplus) were being given for any activity other than for paying income taxes, what other distribution would be deemed fair? In truth the Bush plan only seems skewed to those who think income taxpayers are already undertaxed.

Finally, the idea that President Bush's tax cut is partisan politics is patently preposterous. As the last five years have demonstrated, tax cuts have had bipartisan support. What has been partisan is the opposition to them. More accurately, the opposition hasn't been partisan as much as it has been ideological. Democrats have helped pass tax cuts, but through Clinton vetoes,liberals have been able to prevent their enactment.

President Bush should not forego what is right in response to either false arguments or false friends. His tax cut remains the most economically productive, fiscally responsible, and fairest way to use the budget surplus. He has a far greater chance of achieving success by starting from what is right,than he ever will of achieving what is right by working toward what seems initially easiest.

J.T. Young is the former Deputy Chief of Staff for the Finance Committee in the U.S. Senate.

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