6.27.00
The Politics of the Surplus

6.21.00
The Power of the Purse

6.09.00
A Big Tax Win — and A Loss

6.07.00
Battle of the Sexes

5.25.00
Goldilocks Was Wrong

5.18.00
Stop That Train!

5.09.00
States of Confusion

5.08.00
Congress Busts the Bank — Again

In any case, now everyone agrees that we've got $200 billion surpluses for as far as the eye can see. In fact, the total tax surplus for the next 10 years is $4.2 trillion. As we enter this new era of surplus politics, here is some free advice to the Republican leaders about what to do with all this money:

1) These surpluses should be invested in 2 mega-policy reforms. Fixing the tax system — flat tax or sales tax, take your pick — and creating personal accounts for Social Security. Now's the time to start thinking big — really big. The GOP should be proposing a new tax cut every week. Cut the payroll tax, the cap-gains tax, the gas tax, the corporate income tax. Double IRAs. Index the tax brackets for real bracket creep. Adopt the altenative maximum tax so that no one has to pay more than 25 percent federal tax. Do all of this and we will still have tax surpluses. George W. Bush's tax plan is far too timid given the new numbers. He would only use 1/4th of the surplus for tax cuts. It should be closer to 3/4ths.

2) Don't flinch anymore when Al Gore tries to skewer tax cuts as "risky schemes." As the Wall Street Journal reports, "the bigger surpluses make it much harder for Gore to make that argument."

3) Ronald Reagan, Jack Kemp, and Art Laffer were right all along. We did grow our way out of the budget deficit. Growth and prosperity are the keys to a balanced budget. The anti-supply-siders who called this theory "voo doo" were all wrong. Voters need to be reminded of this early and often. We've now had 18 years of nearly 3.5 percent economic growth. It's the Reagan economy, stupid.

4) Bush is winning the fight on private Social Security accounts. The only half-sane argument that the Left has made in this debate is that the transition costs are too sizable to afford private accounts. We now have $2 trillion of anticipated surpluses in the Social Security fund alone. If we use that money to finance private accounts, we can still pay all the benefits to the current old folks and we can pay for private accounts twice as large as what Governor Bush has endorsed. Again, Republicans should start setting their sights higher.

5) Bush is absolutely right. Cut taxes or we're going to see the biggest spending binge that ever hit Washington, D.C. We could see a federal spending spree that would make the Great Society look like chump change. Already this Republican Congress is hiking domestic spending by 7 percent — and that was before this latest announcement that there's another $2 trillion on the way. The Medicare prescription-drug benefit giveaway is only the first of many new entitlements coming down the pike.

6) The reason we have surpluses is because tax revenues are growing at 8-10 percent per year. Spending hasn't been cut at all — except for military spending. Republicans must start to refer to the "surpluses" as "tax overpayments." Language matters in politics. Tax overpayments should be returned to the people who overpaid. End of argument.

7) Remind voters that before the Republicans took over Congress, the projections were for $200 billion deficits for as far as the eye could see. Republicans in Congress had to drag Bill Clinton kicking and screaming before he would finally submit a balanced budget. As I recall, it took the Clinton-Gore team 5 proposals in 1995 before they finally agreed to a budget without deficits.

8) Clinton's proposal to trade a multi-billion-dollar Medicare prescription-drug benefit for marriage-penalty relief should be rejected. Better to demand a 10 percent capital-gains rate or a reduction in the payroll tax. Marriage-penalty relief is an overrated political issue and has little economic benefit.

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