- The Washington Times - Thursday, January 10, 2002

Watching Senate Majority Leader Tom Daschle make his bizarre, contradictory arguments against President Bush's tax cuts reminds me of the upside-down world in "Alice in Wonderland."

Mr. Daschle says Mr. Bush's tax cuts are the chief reason we are in a recession, but he insists he does not want any of the tax cuts repealed. Forget about Mr. Daschle's statements last year when he called for the president to resubmit his budget with most of the tax cuts removed.

Mr. Daschle says we need "fiscal discipline," but he supported an 11th-hour effort in the Senate to add $20 billion in pork barrel spending, including subsidies for bison ranchers like billionaire Ted Turner. He blocked a vote on a compromise stimulus bill because you guessed it the bill did not contain enough spending for entitlements. And let's not forget the fat farm bill Mr. Daschle tried to pass over Mr. Bush's objections that would burden taxpayers with tens of billions of dollars in wasteful giveaways.

Mr. Daschle thinks lowering taxes for businesses, who, after all, employ most of us, will not promote economic growth. But the plan he outlined last week called for a tax credit for business employers who hire more workers.

How can struggling businesses that have seen their earnings shrink and have less revenue coming in afford a larger payroll? Especially when they still have to pay profit or no profit an onerous Minimum Income Tax. Mr. Daschle doesn't say.

But the convoluted logic being used by the Daschle Democrats gets "curiouser and curiouser," as Alice remarked in Lewis Carroll's famous tale of the Mad Hatter and the demented Queen.

Remember early last year when Mr. Bush warned that the economy showed troubling signs of weakness, as he called for swift passage of his tax-cut plan as "an insurance policy" to spur future investment and economic expansion? Mr. Daschle and the Democrats complained that the president was "talking the economy down" to get his tax cuts. Now they are saying he did not foresee the problems we faced.

But as Mr. Bush forewarned, the economy continued to weaken, long before the tax cuts he called for had even taken effect. In fact, six months after their enactment, only a small fraction of the 10-year tax cuts have been implemented. Nevertheless, Mr. Daschle insists the tax cuts are largely, if not wholly, responsible for what has happened to the economy.

Perhaps the most preposterous economic argument Mr. Daschle has made is that the tax cuts are causing interest rates to rise. His logic: The tax cuts have led to deficits, which in turn are pushing up interest rates.

In fact, there is no relationship between deficits and interest rates. Interest rates fell substantially during the Reagan tax cuts of the 1980s as the deficits climbed. Interest rates rose in the late 1990s as the budget began showing surpluses. Interest rates are not rising as a result of the relatively modest deficits that are now being forecast. They have been declining.

No country has lower interest rates than Japan, but it has the highest deficits in the world. "Interest rates do not rise and fall with the U.S. budget. That is simply a hoax," says economist Alan Reynolds.

And, finally, we get to the utterly dishonest argument made by Mr. Daschle that the Bush tax cuts are erasing the projected surpluses. The modest Bush tax cuts in fiscal 2001, which ended on Sept. 30, cost $74 billion. We finished that year with a $127 billion surplus.

Last summer, the nonpartisan Congressional Budget Office forecast that the budget surplus for the current 2002 fiscal year would total $313 billion. The tax cuts will total $38 billion for this period. Even when you factor in the additional money to respond to the terrorist attacks, that leaves more than $200 billion in surplus revenue. What happened to it?

What happened was what anyone in business understands. The recession caused projected tax revenues to slow down dramatically, erasing the surplus.

Someone has to ask Mr. Daschle how can a $38 billion tax cut erase a $313 billion surplus in one year? Or, in the longer term, how can $311 billion in tax cuts over the first four years of the Bush plan wipe out nearly $1.4 trillion in projected surpluses. The answer is, "It's the economy, stupid."

Mr. Daschle and the Democrats have become so confused and dishonest about basic economics that they have lost the trust of Americans to deal with this issue. Who says so? Bill Clinton's former White House pollster Mark Penn.

In a survey released last month by the Democratic Leadership Council, Mr. Penn asked voters who did you trust more to get the economy growing again, President Bush or the Democrats in Congress? Voters overwhelming favored Mr. Bush by 50-to-36 percent.

After Mr. Daschle's strange "Alice In Wonderland" performance last week, in which he seemed to clearly suggest we should raise income taxes in a recession, don't expect these numbers to improve anytime soon.

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