Tax Cuts Reviving the Economy
March 9, 2004
Democrats who once predicted tax cuts would doom any economic recovery are now using the size of the federal budget deficit to justify repealing them. This won't work with voters, unless enough Republicans get nervous and start retreating on their own, says the Wall Street Journal.
The opposition cry is that Bush came into office with budget surpluses, and somehow it was his recklessness that led to the current deficits. But according to a Senate Budget Committee report:
- The tanking economy he inherited was responsible for 49 percent of the deficit, while the costs of war and homeland security added another 13 percent.
- This year's estimated budget shortfall, at $521 billion or 4.5 percent of gross domestic product (GDP), will be as high as we'll see as long as growth continues and Congress shows some domestic spending restraint.
- The President's budget proposal has the deficit falling by more than half over the next five years; that's because revenues are forecast to grow by 13.2 percent in 2005, as the expansion continues and deepens.
However, some Republicans seem to be losing their nerve just as the tide is turning in their favor. Spooked by the charge of deficit spending, they are balking at making the Bush tax cuts permanent or murmuring about raising taxes on the rich. It's critical that they don't go further and, in the name of phony fiscal rectitude, concede the Democrats' point that tax cuts are a drag on the budget, rather than an investment in the future that will bring in revenues, says the Journal.
Source: Editorial, "GOP Tax Wobble?" Wall Street Journal, March 9, 2004.
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