Tax cut victory nears with striking speed

WASHINGTON, The Washington Post

A year ago, most everyone dismissed a tax cut on the magnitude proposed by candidate George W. Bush as a pipe dream, assuming that the public, and Congress, didn’t have the appetite.

But Bush not only is on the cusp of winning congressional approval of a substantial amount of the original tax reduction he sought, he also has reached this point with impressive speed. Even President Ronald Reagan’s 1981 tax cut didn’t clear Congress until August of his first year in office — and Reagan benefited from sympathy after an assassination attempt the previous March. What’s more, Bush has gotten this far through sheer force of will — without a popular mandate and despite an evenly split Senate.

Bush “just dug in and made it clear we’re going to have a tax cut,” said John Zogby, an independent pollster. “He was singularly focused on it and wasn’t going to take no for an answer. He put all of his eggs into it and was able through charm to persuade enough people in his own party and a couple of folks needed on the other side.”

The speed and size of the tax cut would bring obvious political benefits to the president. It would erase any doubt about his strength following the disputed election and further solidify his standing among the GOP’s conservative base, according to political analysts from both parties. They say passage of a tax cut will strengthen his message as a man who keeps his word, and give him the indulgence of conservatives if he chooses to make compromises on education, prescription drugs, and other issues of importance to moderates.

A tax cut win would not come without cost, however. Bush’s unwillingness to negotiate with Democrats has left partisan emotions raw, particularly in the evenly divided Senate, which pared down his original US$1.6 trillion, 10-year tax reduction plan to US$1.35 trillion over 11 years, and did not cut the top income tax rate as much as Bush preferred. With quick passage of a tax cut, the president leaves himself open to future charges from Democrats that he has spent all the budget surplus that could be used to repair education or health care. And should the economy enter a recession, party analysts say, Bush’s tax cut guarantees that voters will blame him, not his predecessor.

Bill McInturff, a Republican pollster, concurred. “Everything in the world the Democrats will blame on tax cuts over the next year,” he said. “If the economy’s good and solid, it will be wasted breath. If we have a slow and weak economy, it will work.” Whatever the outcome, “this is the first definition of the Bush presidency.”

The biggest risk to Bush, perhaps, is public indifference to the tax cut. After all the publicity over the plan, taxpayers may find their share less than they expected. The cut being debated in the Senate is 20 percent smaller than Bush originally sought, and the greatest cuts will come years from now. Federal revenue will still make up about one-fifth the size of the overall U.S. economy. Democrats think they can score points by arguing that Bush has sacrificed vital programs for a tax cut that gives little tangible benefit, unless you’re rich.

The danger is compounded by Bush’s claim that the tax cut is the answer to most every problem, including high gasoline prices. “The political risk is they’ve raised the specter of the tax stimulus helping people with the energy crisis,” said Gene Sperling, formerly economic adviser to Clinton and now at the Brookings Institution.

Undeniably, passage of the tax cut will boost the president’s standing among an already ecstatic conservative base. McInturff said 68 percent of Republicans “strongly approve” of Bush’s performance, a rating higher than his father achieved except briefly during the 1991 Gulf War, and equivalent to Reagan’s peak in 1981. This should help during the mid-term congressional elections in 2002, McInturff said.