President Bush's Hollow Victory
May 19, 2003
Although administration spokesmen and supporters continue to say that the tax bill will create 1.4 million new jobs, this is really not true. That estimate was based on the administration's original $726 billion plan. With that plan now cut by more than half, it is basically dishonest to keep using the 1.4 million figure. It is doubtful that the Senate tax bill will create more than a trivial number of new jobs, says Bruce Bartlett.
A key reason for Bartlett's pessimism about the job-creating potential of the Senate bill is that all its key provisions sunset (expire) after a couple of years.
- This was done to fit into arbitrary budget targets, but the result is that corporate executives and investors are left in limbo, uncertain about whether to change their behavior in light of the new tax regime.
- But if they don't change their behavior, then there will be no economic benefit an it will all be a waste of effort.
Luckily for Republicans, the Democrats have no program whatsoever, says Bartlett. Because something always beats nothing in Washington, the White House has gotten a pass.
The White House will have its work cut out when House and Senate conferees meet this week, he says. Judging by its handling of the Senate, it will insist on full elimination of taxes on dividends even if it is for just one day and even if every administration economist agrees that it will have no impact on jobs or growth whatsoever. As a consequence, good, growth-oriented tax measures in the House bill, such as reducing the capital gains tax, could be left on the cutting room floor.
Source: Bruce Bartlett, "President Bush's Hollow Victory," National Center for Policy Analysis, May 19, 2003.
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