President Bush will call on Congress to make his tax cuts permanent in tonight’s State of the Union address, a move that Democrats charge actually amounts to a brand-new, $1 trillion tax cut.
“When it comes to fiscal and economic policy, this White House has used gimmicks and distortions from Day One,” said Jay Carson, spokesman for Democratic presidential candidate Howard Dean. “It is absolutely a new tax cut.”
The Congressional Budget Office estimates that making the president’s tax cuts permanent would cost $1 trillion in the next decade. That would be in addition to the $1.7 trillion in tax cuts that the president already has enacted.
But the White House insists the extra $1 trillion does not constitute a new tax cut. In fact, Bush aides portray the initiative as a way to prevent a tax increase.
“The president does not think we should raise taxes on the American people,” said White House spokeswoman Claire Buchan. “The proposal that the president originally put forward did call for these tax cuts to be made permanent.”
She was referring to the $350 billion tax cut that Mr. Bush signed in May. He originally had proposed a $726 billion package, but Congress insisted on reducing the cut by more than half.
So the president brought the price tag down by making the cuts temporary. White House officials figured any future Congress would be reluctant to reinstate taxes that penalized married couples and confiscated inheritances.
Democrats say Mr. Bush is trying to have it both ways by waiting until 2004 to push for a measure that would have doomed the tax cut of 2003. Because most of the Democratic candidates opposed last year’s cut, they also oppose making it permanent.
“The original tax cut was a bad idea,” said Bill Buck, press secretary for candidate Wesley Clark. “Making it permanent would make deficits — which have become a tremendous economic problem for our country — a permanent, systemic problem in our economy.”
White House officials insisted deficits are influenced by the economy, not the other way around. They said permanent tax cuts will keep the economy healthy, which, in turn, will create tax revenues that reduce the deficit.
“I will call on Congress to make permanent all the tax relief we have delivered to the American people and our nation’s small businesses,” Mr. Bush said in a radio address this month. “If Congress fails to act, this tax relief will disappear, and millions of American families and small businesses would see tax hikes starting in 2005.”
Mr. Carson scoffed at such arguments.
“The logic behind this White House’s need for tax cuts is simply baffling,” said the Dean spokesman. “They seem to think every problem in the world can be solved by a tax cut.
“First, they say we need a tax cut because we have a surplus and we need to give that money away. Then, we need tax cuts because we have to stimulate the economy.
“That failed,” he added. “The economy’s still in bad shape.”
Although Mr. Bush concedes that more must be done to help Americans find jobs, he has argued that the economy is booming. Tonight, he is expected to make the case that the only way to keep it booming is to keep taxes low.
“Every American who pays income taxes got a tax cut,” the president said in his radio address. “They should keep that tax cut in the future.”