The group I founded has stirred up much controversy in recent days for running ads in Ohio and Maine to try to get Senators Olympia Snowe and George Voinovich to back the Bush tax-cut plan. The ads, launched by Club for Growth, state that while President Bush needed support in the war against terrorism, some of our “so-called allies” — like France — weren’t there for him. The ads then state that Bush needs votes to pass his economic plan here at home, yet some “so-called Republicans” in the Senate — like Snowe and Voinovich — have said no. The last line of the ad goes like this: “Hey, George Voinovich! Get behind the president’s tax cut and help fix the economy.”
This has the left wing of both parties fuming. Some commentators say it is divisive for the GOP. Others charge that it is in poor taste to link the tax cut to the war. Still others say it is offensive to the French. Well, you be the judge.
But what’s truly strange is that some Republican groups are now running ads applauding Senators Snowe and Voinovich for torpedoing the president’s tax plan. And they blame us for harming the party?
Of course, the people who are most offended by these television ads are the very same people who oppose the president’s tax plan. On CNBC, former Clinton Labor Secretary Robert Reich lambasted the ads as “tasteless.” But what really has Reich hot under the collar is that the ads may help persuade the renegade senators to come back over from the dark side and actually help Bush win on this issue.
It’s clear that the people who have divided the Republican party are Snowe and Voinovich — 90% of the other Republican lawmakers stand with the president on the tax-cut issue. Snowe and Voinovich are the ones who won’t unite under the big-tent policy of tax cuts that will light a fire under economic growth. The Club for Growth ads are simply geared to get these two wayward senators to start acting like Republicans and stop acting like RINOs (Republicans in name only).
Voinovich and Snowe voted for a tax cut that is half as large as the one the president is seeking. Bush started out asking Congress for a $700 billion tax cut. To accommodate GOP moderates he trimmed that number down to $550 billion. This may still sound like a huge amount. But remember — the cut is over a ten-year period and accounts for only about 0.3% of GDP and approximately 1.5% of federal revenues. Snowe and Voinovich nixed the compromise and — along with two other unpersuadable Republicans, Lincoln Chaffee and John McCain — joined with the Democrats to chop down the White House plan.
So it seems we are at an impasse. Or are we?
Snowe and Voinovich are insisting on a tax cut of no larger than $350 billion over 10 years. That will squeeze out the dividend tax cut, even though the elimination of the personal tax on dividends is by far the most stimulative feature of the president’s plan. That’s why the Bush administration rightly says no to the smaller tax cut.
But there is still a realistic hope of breaking the log jam.
Senators Voinovich and Snowe have both intimated that they will vote for a bigger tax cut if other spending programs are reduced to help “pay for” the tax cut. Actually, that’s a great idea.
The federal budget is expected to rise by about 9% this year, after growing 7% last year. Cut that growth rate by 1 percentage point for ten years and, bingo, you’ve just saved $200 billion. Alternatively, the Cato Institute recently identified $80 billion of corporate welfare spending in the budget. Cut 25% of the corporate-safety-net programs over the next ten years and the Bush tax cut becomes completely affordable. This solution would give the economy a double shot of adrenaline: it cuts anti-growth tax rates and it makes the government smaller — thus reducing the crowding-out effect of federal deficit spending on private investment.
This strategy also presents an opportunity for new Senate Majority Leader Bill Frist. The embattled Frist, who has taken some unfair heat for letting the tax vote slip away from the Republicans, can rehabilitate his image as a an adroit legislative powerbroker by patching together a tax cut/spending cut — a deal that wins over Voinovich and Snowe. Go to it Mr. Frist.
My group doesn’t want to kick Snowe and Voinovich out of the party. We simply want them to start acting more like Reagan and less like Daschle. Is that asking so much?
— Stephen Moore is president of the Club for Growth.