The GOP-Daschle Debacle
The bipartisan stimulus deal must be stopped.

Stephen Moore is president of the Club for Growth.
December 17, 2001 8:00 a.m.

hat is it with Republicans that every time they get in a closed-door smoke-filled room negotiation with Democrats, they always emerge having lost their shirts.

This year’s “economic stimulus summit” unfortunately fits the pattern of every “bipartisan deal” the GOP has negotiated with congressional Democrats since Reagan was in the White House and was promised “$3 of spending cuts for every $1 of new taxes” as part of the infamous TEFRA fight of 1982. Carrying on the tradition, George Bush Sr. held a bipartisan summit in 1990 with George Mitchell and Senate Democrats at Andrews Air Force Base, and signed away his no-new-taxes pledge and his presidency.

The Republican party should pass a resolution at its next convention outlawing “bipartisan summits.”

Until then, the bipartisan deal between George W. Bush and Senator Daschle must be stopped before it does real damage to the economy and the Republican party. Bush is this close to agreeing to a $100 billion deal that is long on social-welfare spending and woefully weak on supply-side tax-cut stimulus.

Out of the deal now taking shape, the Democrats get $30 billion for unemployment insurance and taxpayer-subsidized health insurance, more money for “infrastructure” spending for white elephant projects like Amtrak, and funding for an inane tax-rebate scheme for people who don’t pay income taxes. All of these things will hurt the economy and add to the unemployment lines.

The Republicans get . . . well, nothing really: No reduction in the income-tax rates, except for an insultingly trivial chopping of the 27% rate all the way down to 25% rate. (The Democrats even fought that cut.) The highest and most economically punitive tax rates remain cemented in place — at Tom Daschle’s insistence. And there's no reduction in the capital gains tax. Sorry, that was left on the cutting board table.

What about the unfair corporate alternative tax? Has that been terminated once and for all? Nope. That will live on. Was the death tax repealed? Dream on. Daschle vetoed every pro-growth idea, and the GOP capitulated at every turn.

This deal looks like the houses in Whoville after the Grinch has stolen Christmas. Daschle even greedily stashed away the crumbs on the floor. It makes you want to go up to the White House negotiators and smack them and ask, "What in the world were you thinking?"

Here’s my simple advice to the president: Walk away. Save yourself from this insanity while you still can. There’s no shame in stepping back from the table when your adversary isn’t negotiating in good faith. There’s still time to start over and get it right.

If we must have a bipartisan plan, fine. Here’s how to do it. The package is $100 billion. Daschle gets $50 billion. Republicans get $50 billion. Under this deal, the Dems are free to do whatever they want with their $50 billion. They can build a 500-foot monument to Karl Marx and put in the town square in Sioux Falls, South Dakota. They can purchase postage stamps. They can buy pardons for convicted felons. They can make reparation payments to eighth-generation descendants of the slaves. They can spend the money on new Amtrak trains laced in silver and gold. They can stuff the dollars in suit cases and ship it off to big town mayors. Nothing can be nuttier than the stimulus bill that Daschle has already proposed.

But . . . the Republicans get to do whatever they want with their half. With $50 billion, they could actually do some real good for the economy. I would start by cutting the capital-gains tax in half, if only because this is a freebie — it doesn’t cost any money and may even raise funds. (The last capital-gains cut doubled revenues.) Then I would cut all the personal income-tax rates immediately. This would leave enough money left over to buy out Paul O’Neill’s contract as Treasury Secretary.

These measures would do enough good to counteract the negative impact of what the Democrats would do with their half, and still provide a real shot of adrenaline into the economy in 2002.

If the Democrats reject this olive branch, then I’m with Arthur Laffer and the folks at the National Taxpayers Union. The current “stimulus” plan is a lot worse than doing nothing at all.