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about 90 percent of the laws passed in Washington harm the economy,
rather than help it, it's worth celebrating
those rare occasions when Congress actually does something good
for America's long-term prosperity. President Bush's tax bill is
one of these rare and wonderful policy achievements.
No one has complained more about the defects of the tax bill (too
back-end loaded to help the economy anytime soon, too small given
the giant tax surpluses we now have, and too much of a concession
to the class-warfare rhetoric of the Left) than I have, but this
should not blind us to the genuine accomplishment that has been
delivered by George W. Bush and the GOP congressional leadership.
Why have I laid aside my past reservations to trumpet the Bush tax
bill? Here are the top 10 reasons why conservatives should celebrate
this bill's passage:
1) When it comes to tax cuts… Size does matter. One of the
strongest arguments for the Bush tax cut is that it will take $1.35
trillion over the next 10 years out of Washington. This tax cut
is the best conceivable repellent to new spending. This is precisely
why the Democrats fought so tenaciously to prevent a tax cut of
this magnitude from ever being enacted. Workers, businesses, and
parents can spend $1.35 trillion much more efficiently than Congress
can.
2) A return to the supply side. As Larry
Kudlow argued earlier this week, the tax bill provides some
modest, but not inconsequential, increases in supply-side incentives
to save, invest, and take risks. Bush wanted to slash the top tax
rate to 33%. Instead he settled for 35%. But hear this: The elimination
of the phase-out of exemptions and itemized deductions brings the
effective top income tax rate down by at least one more percentage
point. We didn't repeal the whole Clinton tax hike of '93, but this
is a very nice start.
3) Vindication for the politics of tax cuts. Moore's law of politics
is that no one in the history of American politics ever lost an
election by voting for tax cuts. After months of the media assuring
us that Americans don't really feel that tax cuts are a "high priority,"
every vulnerable Democrat in the Senate voted "aye" on the final
passage of the Bush tax cut. Dianne Feinstein voted for tax cuts.
So did Jeanne Carnahan of Missouri, who never had a nice word to
say about tax cuts in her life. So did Senators Max Cleland, Max
Baucus, Mary Landrieu, and Tim Johnson. They must know something
about the politics of tax cuts that the folks at CBS and the New
York Times can't seem to fathom.
4) The Left is fuming. It finally dawned on me: If this bill is
so watered-down, why is it that people like Tom Daschle, Dick Gephardt,
Paul Krugman, and the entire staffs of the Washington Post
editorial page and the Center for Tax Justice have been whining
continuously about how horrible this "ill-advised" tax cut is going
to be for the nation? Paul Krugman moaned on NPR recently that this
tax bill's price tag is really closer to $2 trillion. Let's hope
he's right.
5) The GOP has finally put the 1990 "read-my-lips" debacle behind
it. Taxpayers can trust Republicans again. Tax cuts were the crown
jewel of the Bush domestic-policy platform. The White House absolutely
had to have this win and they got it — notwithstanding several
near-death experiences in the Senate. Bravo to Karl Rove, Paul O'Neill,
Larry Lindsey, Nick Calio, and the whole White House lobbying team
that snared this victory for the president and for the country.
The ghosts of Dick Darman have been put to rest.
6) McCain is now certifiably McCrazy. John McCain showed his true
colors. He actually voted AGAINST final passage of the Bush tax
plan. He was one of only two Republicans in all of Congress to do
so. Why this act of Jeffordsonian betrayal? Because he proclaimed
that the bill favored the rich too much at the expense of lower-income
Americans. He co-sponsored a poison-pill amendment with Tom Daschle
to gut the Bush tax plan. McCain's evil plot was foiled, thankfully,
by one vote. Prediction: John McCain will never again seriously
contend for the GOP nomination for president.
7) Tax-cutting success generates its own momentum. Why not another
tax bill next month to cut the capital-gains tax? To give business
well-deserved tax breaks? To phase in the tax cuts even faster?
To repeal the death tax sooner? The conservatives in the House,
including people like Dick Armey and Pat Toomey, are already crafting
proposals.
8) Class-warfare rhetoric fell flat. The Left's chief rallying cry
against the tax bill for these last three months was "tax cuts for
the rich." It didn't play in Peoria. Here's an example: A recent
McLaughlin and Associates survey found that 60% of voters said they
favored eliminating the death tax even for "billionaires." The lesson:
The growth argument of the Right once again trumped the envy argument
of the Left. JFK was right: A rising tide does lift all boats.
9) Fire the Joint Tax Committee. The biggest obstacle to tax cuts
this year was Lindy Paul, the staff director at the Joint Tax Committee
— the committee charged with predicting the revenue losses
from tax cuts. Consistently, Paul vastly overstated the "cost" of
the tax cuts, even predicting that a capital-gains cut would lose
revenues, when history proves conclusively that capital-gains tax
cuts always raise revenues. If we want more tax cuts, we need to
insist on real-world scoring at the JTC.
10) Want tax cuts? Vote Republican. Republicans win when they draw
sharp distinctions with Democrats. On the tax issue, they have done
just that. Every Republican in the Congress, save two (Chaffee and
the aforementioned Mr. McCain) voted for tax cuts. Meanwhile, the
Democratic leadership and all the left-wing interest groups rallied
against tax cuts. This sharp distinction on the tax issue can only
help the Republican party, which is now genuinely the party of Reagan.
So conservatives should take some Prozac and cheer up. We've just
passed the third-largest tax cut since World War II. This might
not have been a Reagan-esque accomplishment — but it's awfully
close.
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