Bush's tax cut challenge: An historical view

Posted: Feb 10, 2001 12:00 AM
One of my favorite economists, Larry Kudlow, writing for National Review Online, suggested that President Bush "is essentially governing under Ronald Reagan's policy agenda." I agree, but Kudlow got me to thinking about the different dynamics operating today and Bush's prospects for implementing his agenda, particularly his tax cut. When Reagan took over, we were in the throes of the Carter malaise. Today, although the economy is definitely declining, most people have yet to feel the full effects of the slowdown (and President Bush fervently hopes they won't have to.) Today, Republicans control both houses of Congress, albeit narrowly. On the other hand, Democrats have elevated class warfare to an art form, using luxury vehicles as envy props and the like. Today, Democrats are in full-fledged war-mode. In a stunning exhibition of the extent to which even recent history can be distorted if you repeat lies often enough, they are portraying themselves as the victims of Republican election-larceny following their failed coup attempt in Florida. They are using this canard to fuel opposition to Bush's agenda. This was made quite clear by the war cries of newly elected DNC Chairman, Terry McAuliffe. Can't we just "move on," Terry? It's not just McAuliffe. Here's what House Democratic Whip David Bonior said about Bush's tax plan: "There is going to be one hell of a fight over this, and there should be." Congresswoman Stephanie Tubbs Jones added, "George W. Bush is not going to be able to charm himself into a big tax cut." Speaking of charm. Beyond class (and race) warfare, Democrats have another weapon in their arsenal -- never mind that it, too, involves a flagrant misrepresentation of the facts. History, they say, demonstrates that across-the-board tax cuts result in astronomical deficits. I pray that someday that myth will be put to bed. Reagan's tax cuts did not result in higher deficits. Revenues nearly doubled in the '80s. It was the profligate spending of these latter day deficit hawks in Congress that rocketed the budgets into record imbalance. Which brings me to a very important point. I believe it is George Bush, not the Democrats, who has learned from history. Hardly noticed is his quiet, but firm commitment to regain control over the spending side of the equation. Columnist Donald Lambro reports that John Cogan, a budget analyst at the Hoover Institution, is helping President Bush prepare his budget plan. You should know that Cogan helped draft Bush's tax plan. This is significant because it shows that Bush is using an integrated approach to fiscal policy, giving equal weight to taxing and spending concerns. As further evidence of his emphasis on spending, Bush is trying to rein in pork-barrel spending, admittedly a bipartisan sin. He is also making some conservatives nervous by temporarily delaying fulfillment of his promise to rebuild the military. (Fear not; he's not going to break his promise. Help is still on the way. He just wants to thoroughly study the issue before injudiciously hurling federal dollars.) Bush, as history student, knows that we didn't tax ourselves out of the deficits; we grew out of them with an assist from the Republican Congress finally retarding the rate of spending increases. Bush understands that the recession of the early '80s was either caused or greatly exacerbated by Democrats reducing (from 30 percent to 25 percent) and delaying the implementation of Reagan's tax cut. This directly led to major Republican losses in the 1982-midterm congressional elections. Bush grasps that a sluggish economy could cause a similar loss of GOP control in 2002. Though the tax and budget battles will be taking place in Congress, the real battle will be for the hearts and minds of the people. For Democrats, this isn't about the middle class and the so-called working people. It's about regaining power, period. Since they've already taken the gloves off publicly, Republicans don't need more lectures from them on bipartisanship. Bush's father fell for the Democrats' "bipartisan" overture in 1990. In reliance on their promise to cap spending he broke his no-new taxes pledge. Then they, and Clinton, had the audacity to use his broken promise against him in the 1992 presidential election. How much do you want to bet that George W. is aware of this history lesson, too? You can be sure that he'll stick to his guns. As long as congressional Republicans follow suit, Republicans can pass the Bush agenda and prevent a repeat of 1982 and 1992.