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W. Holds His Ground
Bush meets expectations in his first address of Congress.


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Larry Kudlow

Carrying over from the campaign debates with Al Gore and the inaugural speech, once again George W. Bush won the expectations game in his quasi-State of the Union message before the Congress and the U.S. public last evening. In both presentation style and content message, the new president was excellent.

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What the public is learning is that Bush will operate as a low-keyed, humble leader with a clear business-style method of delivery and thinking, who is more than willing to share the credit in order to get things done. He is not a self-centered, arrogant know-it-all, nor does he engage in unnecessary theatrics. Instead, he is a self-contained man who operates in his own space and communicates directly with an agenda of traditional beliefs that does not change.

All this is a welcome relief from the Clinton era, and it is not surprising therefore that public-opinion polls are giving Bush very high ratings.

In terms of the content of Bush’s message last night, what we got is exactly what was expected. He unveiled a policy plan containing tax cuts, limited government, a flexible budget freeze, a clear move to produce more energy, and a continuation of his version of compassionate conservatism with respect to government’s helping hand on education, health care, and Social Security.

Some conservatives may grouse a bit on education spending, but Bush is determined to follow-through on his experiment to increase spending where it can be tied to clear performance accounting and standards.

His health-care message may sound like a Democratic party approach, but it insists on means-tested limits to prescription drugs and market-oriented consumer choice on broader health-care delivery issues. Of course, he aims to preserve Social Security benefits, but here too he is determined to move ahead on private savings accounts — again emphasizing market-based choice and ownership. So while his social policies may sound like Democratic initiatives, they are wrapped in free-market conservative clothes.

Bush’s political judgement is sound. The nation wants solutions to health, retirement, and education, but the public consensus is a center-right vision, not a government-planning center-left view.

Most of all, Bush was steadfast in his tax-cut plan. He realizes that tax cuts are not only the economic centerpiece of his new presidency, but they are a political crucible as well. When Ronald Reagan defeated the Tip O’Neill Democrats on tax cuts in 1981, it set the stage for a politically powerful presidency. When George Bush Sr. was forced into a tax-hike plan in 1990, it allowed the George Mitchell Democrats to roll over the Bushies on domestic issues right through the bitter end. So the 43rd Bush is exactly right in staking out a huge commitment on his tax-cut program. With some nice phrase turning, I might add:

“You see, the growing surplus exists because taxes are too high and government is charging more than it needs. The people of America have been overcharged and on their behalf, I’m here asking for a refund.”

Bush had some solid supply-side thinking in his tax-cut offensive last night. The proverbial waitress supporting two children on $25,000 a year will not work the extra overtime hour unless she is rewarded by keeping more of what she earns. “We must put money back into the hands of the people who buy goods (demand-side), and create jobs (supply-side investment).”

Bush also stuck with estate-tax repeal and a retroactive tax-cut implementation date. More, he didn’t back away from upper-end tax relief. “In my plan, no one is targeted in or targeted out…no one should pay more than a third of the money they earn in federal income taxes, so we lowered the top rate to 33%.”

Hopefully, the entire Republican party will realize that victory on the tax cut will pay enormous political dividends, spilling over to capital-gains tax relief, IRA super-saver expansion, corporate tax-rate cuts, defense policy, Social Security reform, and greater energy production.Defeat on the tax bill, however, will surely lead to a political slide.

That is why the GOP should not permit itself to be distracted by Clintonian shenanigans. More congressional hearings will only permit Clinton to continue to suck the political air out of Washington, thereby damaging a potential Bush ascendancy. Let the National Enquirer and the New York Times impeach and convict Bill Clinton over Pardongate. They are doing a fine job of it.

Meanwhile, the number-one top GOP political task right now is to get George Bush’s tax cuts over the finish line.



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