White House politicos fret that further tax cuts are a political non-starter at a time of growing budget deficits. Nonsense. Tax revenues are growing slowly not because taxes have been cut too much, but because of insufficient economic growth to generate the tax receipts to balance the budget. To paraphrase President Kennedy in 1963: Without economic growth, there will never be enough revenues to balance the budget. If Bush can put the economy back on a sustained 3-4 percent growth path, the budget will quickly rebalance itself. Meanwhile, the Treasury Department should rack up a study on the dynamic revenue effects of tax cuts, a subject with ample academic backing.
The GOP Hill leadership could likely peel off enough Democratic votes to enact an anti-recession tax-cut measure. It would force pro-tax-cut Senate Democrats in tight races this year—Carnahan of Missouri, Johnson of South Dakota, and Baucus of Montana—to respond to the proposal of fast-forwarding tax cuts. After all, if lower tax rates make sense for 2006, why don’t they make sense now with the economy wobbling along? And how will they justify voting against investor-class Americans on issues like capital-gains cuts when stockowners now constitute close to 60 percent of the electorate? Either way, Republicans win.
Comments