William Salatan has a scathing piece in Slate on Bush’s blindness to details which contradict his conviction, arguing that the Democrats shouldn’t attack him because he’s a liar with no principle, but because his principle keeps him from adapting to changing circumstances. He does seem to latch on to a pattern that cuts across domestic and foreign policy, but I’d take exception to his characterization of the tax cuts’ initial wisdom:
Bush was right to propose tax cuts in 1999. The economy was booming. The surplus was ballooning. Liberals were itching to spend the money on new programs, despite Bill Clinton’s promises to pay down the national debt. Bush wanted to get the money out of Washington before that happened. That’s why, under his plan, the size of the tax cut was to grow from year to year. The point was to keep the surplus from piling up, refunding more and more money as it poured in from a growing economy. That’s also why Bush cut taxes across the board instead of targeting middle-class families who would spend the money immediately. He wasn’t trying to stimulate the economy. He was trying to give the money back to the people who had paid it in, which meant largely the rich.
Huh? Any idiot knew that the surplus wasn’t going to keep rolling in. The stock market bubble had already burst (NASDAQ’s crash was in spring of 2000), and while the effects had yet to work their way throughout the whole economy, clearly the days of huge capital gains tax revenue were over. And if liberal legislators were itching to spend more, it’s unclear that major spending initiatives would get through a divided Congress. In any case, Gore campaigned on a platform of using the surplus to fund a prescription drug benefit (Republicans have passed their own) and to shore up Social Security. He got a lot of guff for his lockbox comments, but all the talk this week about Social Security’s longterm solvency (which, as Paul Krugman points out today, should not be confused with the difficulties facing Medicare) make Gore’s plan look pretty sensible.
In sum, Bush’s tax cut wasn’t a good idea turned bad through changing circumstances - it was always a reckless proposal sold through misrepresentation (willful or stupid) of budget and economic realities. Krugman’s Fuzzy Math documents these over and over and stands as a document worth revisiting 3 years on.
I understand that those right and center distrust liberals on tax policy and in 2000 were inclined to discount their warnings that a future surplus wasn’t something we should bank on as disingenuous arguments meant to increase government spending. But time has shown that the liberals’ warnings in 2000 were right.
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