That '80s show

Elephantine military budgets, feed-the-rich tax cuts, ballooning deficits! Democrats charge that Bush is trying to revive those glorious days of Reaganomics. But do they have they guts to fight him?

By Anthony York

Feb 6, 2002 | The tax cut proposal unveiled by the Bush White House Monday is as bold and aggressive politically as its military assault on Afghanistan last October -- and the administration seems to be counting on Democrats to fold as quickly as the Taliban.

The political chutzpah of the Bush budget plan is dazzling: The White House is admitting that it will return the nation to the days of budget deficits -- briefly, it insists -- as well as break a campaign pledge to leave the Social Security and Medicare surpluses intact, all to bankroll nearly $2 trillion in tax cuts over the next 10 years that will give more than 40 percent of their benefits to the wealthiest 1 percent of U.S. households.

The $1.35 trillion tax cut package signed into law last year was scheduled to be phased in over the decade, and expire over time. But Bush's new budget seeks to make those cuts permanent, and phase them in more quickly. The accelerated timeline would cost the federal government an additional $175 billion over the next three years. Bush's new budget also contains an additional $591 billion in new tax cuts. Even in the short term, the resulting red ink will be significant: The $2.13 trillion budget sent to Capitol Hill Monday forecasts a $106 billion deficit this year and an $80 billion shortfall in the 2003 fiscal year. Congressional watchdogs say the real deficits could be much higher.

With the nation struggling with a recession as well as a war effort requiring new military spending, and with national polls showing voters prefer protecting Social Security to tax cuts, Democrats would seem to have an ideal environment for making a spirited counterattack against the tax cuts, one that would have a strong chance of victory. But there's no evidence yet that they'll mount a united front against tax cut fever.

So far, the Democratic response has taken three forms: Attack the budget on the grounds it eats up the Social Security surplus, try to out-saber-rattle the Republicans and claim it threatens the military, and -- the minority response to date -- attack the budget-busting tax cut itself, for putting the nation's social spending needs in jeopardy.

To date, the populist response isn't coming from the Democratic leadership. Only a month ago, Senate Majority Leader Tom Daschle, D-S.D., seemed ready for a full frontal assault on the Bush tax cuts, in a fiery speech to the Center for National Policy Jan. 4. "Unfortunately, last spring, Republicans chose exactly the wrong solution. They made a huge tax cut their No. 1 priority -- ahead of everything else -- and discarded the framework of fiscal responsibility," Daschle said then. "Sept. 11 and the war aren't the only reasons the surplus is nearly gone. They're not even the biggest reasons. The biggest reason is the tax cut. At a time when we need to fight both a war and a recession, when our nation has urgent needs on all fronts, the tax cut has taken away our flexibility and left us with only two choices, both of them bad."

Bush struck back quickly, accusing Daschle and the Democrats of returning to their tax-and-spend roots. "There's going to be people who say, we can't have the tax cut go through anymore," Bush said. "That's a tax raise. And I challenge their economics, when they say raising taxes will help the country recover. Not over my dead body will they raise your taxes."

The rebuke seemed to work, on Daschle anyway. Now the majority leader has returned to the tried and true Democratic strategy of defending the Social Security surplus, with no mention of the Robin Hood in reverse dynamic of the budget's tax cuts.

"The dramatic fiscal decline of the past several months suggests that we need a plan to strengthen our economic security as well," Daschle said Monday. "We need a plan that will keep our commitments to Social Security and Medicare without making deep cuts in benefits, shortchanging our other national priorities or running deficits. Unfortunately, the budget the administration submitted is not that plan."

Sen. Joe Lieberman, D-Conn., thinks the best way to attack the Bush plan is to argue it could undermine the defense budget. "On further review, this budget appears to fall short in important ways -- the price to be paid, it seems, for the president's tax cut," Lieberman -- like Daschle, a potential 2004 presidential candidate -- said in a statement Monday. "In fact, the president's proposed $35 billion [military budget] increase dwindles substantially when you factor in inflation, critically important pay raises mandated by Congress and owed to our troops, necessary improvements to military health, and other obligations we must meet. What's left over is less than $10 billion, which is not nearly enough to meet the military's essential needs for procurement and transformation."

It's been left to Sen. Ted Kennedy, D-Mass., to attack the tax cut for its own sake, as a gift to the very wealthy that undermines the economic recovery and stalls needed new programs Bush himself has backed.

"In the aftermath of Sept. 11, we are facing major new demands on our national resources which must take priority. We cannot meet these demands and afford such an enormous tax cut without raiding Social Security and Medicare. Jeopardizing the security of millions of senior citizens to finance the full tax cut is not an acceptable price to pay. We cannot now afford the entire tax cut without ignoring critical national needs. Neglecting our children's education ... to finance this tax cut is not an acceptable price to pay. Yet, that is what the administration budget would do."

Kennedy spokeswoman Stephanie Cutter admits most Democrats are unlikely to be as aggressive as her boss is on the tax cut issue.

"I think people are hesitant to challenge the tax cuts that have already passed. Clearly, we don't have the resources to meet our priority needs. His budget does not provide enough to put in place a prescription drug program, doesn't provide funds to implement the education reform bill. If we can't find funds for these priorities, additional tax cuts are not responsible. I think people will be more vocal about the new ones."

Next Page: 80 percent of voters say cancel the tax cut to protect Social Security

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