The pitfalls of moderation and compromise

Posted: Sep 12, 2001 12:00 AM
I had almost decided what to write about this morning when I received an e-mail from one of my favorite e-mailers touching on the same subject. I chose to interpret it as a sign. The always-thoughtful Christopher lamented, "It seems as if 'our side,' from the president down to the Congress, is continually doing just enough to anger and therefore energize the opposition, but never enough to convince 'the base' that significant and beneficial changes are imminent." I concur that President Bush and congressional Republicans seem to be seeking to please both sides and failing with both. But more importantly, in the process, important policy is being compromised. It's hard to escape the conclusion that congressional Democrats are not open to compromise – they are out to win, usually at any cost, including that of the public good. For example, Senator Daschle has been a fixture on political talk shows excoriating Bush for ruining the economy through his tax cuts. Don't forget that Daschle signed on to a plan for tax cuts greater than those invoked by Bush in the short run. Also, Daschle has the relationship between the surplus and the declining economy exactly backwards. The projected surpluses are tanking along with the economy, not the other way around. As supply-siders have been saying for years, revenues are greatly affected by economic growth or the absence of it. Obviously, short-term revenues will be reduced automatically when government monies are initially refunded to taxpayers. But declining surpluses don't cause a declining economy – a declining economy causes declining revenues. It's admirable that President Bush has tried to establish a new atmosphere in Washington but, at some point, we must recognize that in terms of partisan civility, Washington, D.C., is not Austin, Texas. Ultimately, reaching out hasn't done much good in terms of reconciling the parties or accomplishing beneficial policy changes. The Democratic leadership demands that Republicans moderate their policies to the point of completely diluting them. When the half-baked policies fail, Democrats will be standing on the sidelines blaming Republicans and denying their own influence. That's just politics, you say. Maybe so, but we don't have to fall for it every time, do we? If Republicans are going to be blamed for failures, at least let them be their own failures, not those eventuating as a byproduct of adopting policies they really don't believe in. Take the Bush tax plan, for instance (though we could just as easily use as examples the education plan, affirmative action, the assertion of executive privilege or others). His tax bill was passed, but not before it was gutted of its primary growth-stimulating features. Presumably in an effort to appease the class warriors, Bush agreed to front-load his tax cut with a demand-side refund, which history has shown will have little impact on sustained economic growth. Did it pacify Daschle and Gephardt? That's a laugh. Yet Republicans remain accountable for a non-supply side tax cut and still haven't won any points for "compassion" or for trying to get along. Republicans have also completely bought into this politically correct – but factually incorrect – notion regarding a Social Security lockbox. Since there is no such thing as a Social Security trust fund (Social Security revenues are commingled with general revenues), it is offensively absurd to hold Bush to a promise not to raid that fund. Since there is no Social Security trust fund, a promise not to raid it is, in effect, a promise not to deficit spend (counting only general revenues), because you only have to resort to Social Security funds when general revenue funds are exhausted. The recent economic downturn and its consequences on the budget show the folly and futility of promises to balance the budget. Taxes and revenues are not a zero-sum game – a dollar of taxes does not necessarily produce a dollar of revenue. So efforts (and promises) to balance the budget that assume a static rather than a dynamic economy are hopelessly misguided. So, how about a return to the supply side, coupled with Gingrichian reductions in spending? The first step would be the implementation of a dramatic cut in capital gains tax rates, which would simultaneously boost economic growth and tax revenues. As for any political fallout, Mr. Bush is just going to have to deal with the inevitable demagogic charges that he's catering to the wealthy. In today's political climate at least, Republican moderation and compromise are a formula for disaster, both for the country and for Republicans. It's time to revert to what we know works.