January 8, 2005

WHO MAKES A MESS PERMANENT?:

Domestic Strategery: : Is the White House doing the best job to bring the president's daring domestic agenda to fruition? (Fred Barnes, 01/17/2005, Weekly Standard)

MAYBE WE SHOULDN'T WORRY. President Bush is bravely pushing ahead to introduce personal investment accounts in Social Security and to save the system from insolvency. This is political turf where others, including President Reagan, have feared to tread. And Bush is poised to press later this year for an overhaul of the tax system, making it simpler and producing--we hope anyway--lower rates and a broader tax base. So he is living up to his reputation for dismissing lesser issues as "smallball" and saving his time and political muscle for more significant matters. In his second term, Bush told new members of Congress last week, he intends "to confront problems, not pass them on."

Why, then, are we a bit anxious about the president and his daring domestic agenda? It's certainly conservative enough. The problem is that the White House seems, at times and perhaps inadvertently, to be headed toward undermining its chances of bringing the agenda to fruition. We say this based not only on a few hints or evasions by White House officials, but also on several of Bush's strategic decisions about how he's going to deal with Congress this year on taxes, Social Security, and the budget deficit.

Let's start with taxes. The crown jewels of the president's first term were his tax cuts on individual income, capital gains, and dividends. They lifted the economy out of recession. Without them, Bush probably wouldn't have been reelected. The obvious next step is to make these cuts permanent. The president sought congressional approval of this last year but came up short in the Senate. Now Senate Republicans have a bigger margin. Why not try to lock in the tax cuts as soon as possible? The White House has balked. While Bush's budget proposal for 2006 will assume the tax cuts are permanent, that's not the same as actually enacting them as such. But the White House has its reasons. One is that making the cuts permanent might undercut its bargaining power in the battles over Social Security and tax reform. Our worry, however, is the signal this sends to Democrats and financial markets that the Bush tax cuts could be negotiable, that the president might give up some of the cuts to achieve other goals. That would be a mistake--one worth worrying about.,/blockquote>
We've always wondered how anyone, including the President, could argue with a straight face both that the current tax code is an overly complex mess and that it should be made permanent. Of course they're ready to trade.

Posted by Orrin Judd at January 8, 2005 5:18 PM
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