- The Washington Times - Wednesday, May 30, 2001

You would not think so from listening to the moaning and griping in the press about the administrations problems, but it is still true that the 10-year, $1.35 trillion tax-relief bill Congress passed over the weekend represents an extraordinary legislative achievement for President George W. Bush four months into his first term. Indeed, as a measure of leadership, it was reminiscent of "the Gipper" and LBJ in their prime and at their best. In leading a bipartisan Congress 12 Democratic senators and 28 Democratic representatives voted for the measure that provides the largest tax cut in 20 years Mr. Bush managed to accomplish his primary goal 10 weeks earlier than President Reagan achieved his in 1981.
By any standard of measurement, Mr. Bushs victory was huge. In defiance of the conventional wisdom that prevailed not only throughout last years campaign but also following Mr. Bushs inauguration, the bill passed by Congress on Saturday proved to be extremely close to the proposal Mr. Bush unveiled in Iowa on Dec. 1, 1999, as the front-running candidate for the Republican presidential nomination. The across-the-board tax-rate reductions approved by Congress were nearly identical to Mr. Bushs proposal. In Iowa, candidate Bush proposed changing the current personal income-tax percentage rates from 15, 28, 31, 36 and 39.6 to 10, 15, 25, 28 and 33. The bill Mr. Bush will sign changes the percentage rates to 10, 15, 25, 28, 33 and 35. While the 35 percent rate is 2 percentage points higher than the top rate Mr. Bush sought, it approximates the 33 percent rate because the tax-relief legislation repeals the phase-out of itemized deductions and personal exemptions for high-income taxpayers. Eighteen months ago Mr. Bush proposed repealing the death tax, which this legislation does. Mr. Bush wanted to double the $500 per child tax credit, and this bill does that, too. Mr. Bush proposed alleviating the marriage penalty, and he has achieved that goal as well.
In several respects, the final product achieved by Mr. Bush in Congress was even better than what he proposed in Iowa. Consider its size. Its worth noting, for example, that the $1.35 trillion tax cut passed by Congress, which covers the same 10-year period (2001-2010) as the plan unveiled in Iowa, is actually greater than the cumulative $1.3 trillion in tax relief Mr. Bush proposed 18 months ago. And heres a very key, if technical, point. Senate rules require the repeal after 10 years of all tax-relief legislation that is considered on a fast-track basis, which prohibits opponents from mounting a filibuster requiring 60 votes to end. (Nobody, especially the opponents of Mr. Bushs tax cut, believes that Congress will decide in 2010, an election year, to raise taxes in 2011 by failing to reinstate the cuts that would otherwise lapse on Dec. 31, 2010.) The upshot, once the tax cuts are reinstated as expected, is that the the total tax relief through 2011 will be substantially larger at least $200 billion larger than the $1.35 trillion allocated for tax relief in the budget resolution covering the 2002-2011 period.
In addition, unlike the Iowa plan, the new legislation establishes the 10 percent rate retroactive to Jan. 1 and begins reducing the other tax rates July 1, also earlier than Mr. Bush first envisioned. Those who believe bigger tax cuts are always better than smaller ones as this page certainly does should know that the effective tax cut engineered by Mr. Bush is, for all practical purposes, much larger than advertised. Later in the decade, Congress will almost certainly limit the effect of the so-called alternative minimum tax, which will further increase the size of the tax cut. In addition, the need to phase-in tax cuts during the 2001-2010 period means that tax relief during the following decade, after all cuts have been fully implemented, will be substantially greater than tax relief during the phase-in decade.
Moreover, as noted by Chief Economic Adviser Larry Lindsey, who is truly the unsung hero in this monumental legislative achievement, the estimated $55 billion in tax relief that will occur during the second half of 2001 will represent, on an annual-rate basis, a much-needed fiscal stimulus approximating 1 percent of gross domestic product. The speed with which Mr. Bush achieved his tax cut means that the federal government will unlike almost all previous efforts to provide counter-cyclical fiscal stimulus actually deliver the tax relief at the stage of the business cycle when it is so desperately needed.
In all respects economic, political, legislative Mr. Bushs tax-relief achievement represents a monumental success for this very young administration.


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