PRE-EMPTIVE STRIKE

With His Tax Cuts, Bush Pre-empts The Future (Jonathan Rauch, April 25, 2003, National Journal)

Pre-emption is the name of the Bush administration's game, not just abroad but at home. President Bush understands better than any president since Ronald Reagan that the chief executive's chief power is to set the agenda. Bush also understands that this power cannot be banked. Use it or lose it. So he uses it -- and how. Abroad, he launches a pre-emptive invasion. At home, he launches a pre-emptive tax cut.

With the invasion, Bush seeks to pre-empt Saddam Hussein's development of weapons of mass destruction. With the tax cut, he seeks to pre-empt -- well, there is a question. What, exactly, does the tax cut pre-empt? [...]

Congress is scaling back Bush's tax cut to perhaps half of his request. But Bush will almost certainly get a tax cut; the question is only how large. So completely has he dominated the agenda that he wins even if he loses. Maybe the agenda is what he really set out to pre-empt. If so, he has done as well in Washington as in Baghdad.

Bush's bold initiative in Iraq looks irresponsible to his critics because it takes great risks for uncertain benefits. His tax-cutting fits the same mold. There is, however, an important difference. The most destabilizing problem in the geopolitical world right now is the lack of democracy in the Arab world; liberating Iraq will almost by definition be a step in the right direction. The most destabilizing problem in the fiscal world is the high cost of paying pension and health care costs for Baby Boom retirees; cutting taxes, however, is almost by definition a step in the wrong direction. [...]

The first President Bush agreed to a tax increase that did more than any other single action to break the back of the federal deficit. But look what happened to him. His son, having learned that lesson, is a Time Bandit, encouraging rather than taming politicians' natural tendency to embezzle from the future.

This year's tax cut, assuming one passes, will be moderate in size, and considerably smaller than its 2001 predecessor. Its significance lies less in its scale than in its confirmation of Bush's determination to chart a new course for fiscal policy, one that would reduce federal taxes to pre-Clinton levels. Bush the gambler is betting that he will come out looking like President Reagan, whose deficits bought economic reforms and a stronger national defense.

Mr. Rauch's understanding of recent economic history is minimal--the entire cut in the deficit and the projected surplus was almost exclusively a function of the peace dividend, which saw Defense spending fall from 6% to 3% of GDP, a savings so huge that it made up for the deletirious effects of both the Bush I and Clinton tax bills--but his political sense is relatively astute. What George W. Bush actually did was to prevent what would otherwise have been a call for tax increases this year. He thereby avoided the fate of the last three presidents--yes, including Ronald Reagan, who made the horrible mistake of signing on to several tax hikes, as a result of his zeal for balanced budgets--all of whom suffered electoral defeats after hiking taxes. As Mr. Rauch correctly (almost) points out, the significance of this year's tax cut, regardless of its size, is that it is going to happen at all. This is a historic reversal in a time of growing deficits and an astonishing achievement for Mr. Bush. Posted by Orrin Judd at April 26, 2003 11:52 AM