- The Washington Times - Thursday, March 8, 2001

What belongs to Washington is Washington's. What belongs to taxpayers is negotiable. It's a Beltway axiom fostered by a withholding tax that relieves workers of their earnings even before they get their paycheck. But Treasury Secretary Paul O'Neill, to his credit, seems singularly uneducated about the ways of Washington.

This week, Mr. O'Neill made the rounds of Sunday talk shows to defend the indefensible the proposal by President Bush to cut taxes by $1.6 trillion over the next 10 years. That's a disappearingly small fraction of the overall revenues the government expects to receive over that same period. But by Washington standards, even that is too much.

What happens, asked Tim Russert of "Meet the Press," if predicted surpluses don't materialize? Even Federal Reserve Board Chairman Alan Greenspan has expressed doubt about the tax cuts under such circumstances, he said. Shouldn't the Bush administration be concerned too? Of course, Mr. Greenspan also raised questions about spending initiatives at the same time Mr. Bush has proposed substantial increases in, for example, Medicare. But axioms being what they are, Mr. Russert didn't ask whether they should be cut.

Mr. O'Neill didn't dispute the fact that budget forecasts are invariably uncertain. But that doesn't mean tax relief has to be uncertain: "[W]e don't get a chance to decide maybe. We get a chance to decide, 'Are we going to send the people's money back to them when we know we've got surpluses?' Let's not think about 10 years. If we're going to make change in the tax system, it does make sense for it to have some permanence so people can count on how much of their money they're going to be able to invest in housing and automobiles and education and all the rest of that." Washington spends with certainty regardless of budget outlooks. Why not treat tax relief the same way?

The treasury secretary was if anything even more outspoken with respect to the Beltway corollary that holding overall spending growth to 4 percent, as Mr. Bush has proposed, is a non-starter. Told that Senate Budget Committee Chairman Pete Domenici had said as much, Mr. O'Neill tried to bring some non-Washington perspective to the problem: "I must tell you, I find it astounding to come back into this town now, after being gone for 23 years, and find people kind of kiss off 4 percent additional growth in spending, or 3 percent additional growth in spending, as though that's a giveaway and we've got to add on top of that … I think we've got to import what the rest of us out there in the real world have been doing. You don't start with an assumption you're going to get a price increase… in your business this year. You start with an assumption if you can hold your price, you'll be lucky. More likely, it's going to go down. And what you've got to do is figure out a way to deploy your resources in a way that creates value… But the federal government needs to import some of that logic and not give itself a free pass with the taxpayers' money for a 4 percent increase for 10 years as though that's a starting place."

Exactly right. It may seem a quaint notion in these days of sophisticated statecraft to imagine that Washington has anything to learn from those outside the city, but Mr. O'Neill looks like a man quite capable of spreading the news.

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