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Archive for Thursday, March 1, 2001

Bush stakes success on tax cut

March 1, 2001

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President Bush is hoping history repeats itself. That was the underlying premise behind his speech to Congress on Tuesday night and on the monthlong buildup to it.

But the times are quite different in both economic and political terms from the situation 20 years ago, when another newly elected Republican president came seeking a big tax cut and sharp spending reductions from lawmakers.

Like Ronald Reagan in 1981, George W. Bush has staked much of his first-year success on persuading Congress to adopt a sweeping across-the-board tax cut. And like Mr. Reagan, he spent much of his first month in office trying to build support for his plan.

Indeed, it is striking to read the stories preceding Mr. Reagan's first speech to Congress and see how similar they sound in framing the issues and the stakes to ones written in the past week.

But Mr. Reagan took office amid serious concerns about a recession, inflation and a soaring deficit. The climate was right for dramatic action.

Mr. Bush is setting forth his proposals amid greater doubt over whether the economy merely has slowed down or really is headed for a recession. The president used cautious language Tuesday night, noting that "the long expansion that began almost 10 years ago (i.e., during the presidency of his father) is faltering" and seeking to appeal to Democrats by echoing John F. Kennedy's 1960 plea to "get this country moving again."

But neither the public nor Congress so far has shown the urgency that was present in 1981. While polls show the public favors a tax cut, they also show it isn't high on the priority list, something Mr. Bush hopes to change.

In addition, the political landscape now is quite different.

Mr. Reagan won a substantial victory in both popular and electoral votes that gave Republicans control of the Senate for the first time in 26 years and cut sharply the Democratic hold on the House.

Democrats were in disarray, and some rushed to join the new GOP president.

Mr. Bush won the narrowest electoral victory of modern times and got fewer popular votes than his Democratic rival. While Republicans control both the House and their Senate, their margins are slim, and they lost seats in November.

And except for Sen. Zell Miller of Georgia, Democrats so far have shown little interest in backing the Bush tax plan.

Interestingly, the Democratic leaders also looked back to 1981 in their response to the president Tuesday night. "Congress supported that experiment," Senate Democratic leader Tom Daschle said, referring to Mr. Reagan's plan. "It was a huge mistake. It took us 18 years to get out of that ditch."

If the president's estimates are as faulty as those in Texas when he won a big tax cut two years ago, Mr. Daschle added, "His tax cuts would bring back huge deficits, increase the national debt and put our economy back in the ditch."

Mr. Bush opened himself to allegations of "fuzzy math" by proposing a $1.6 trillion tax cut and then asking that it be made retroactive, which could increase the cost. He proposed a $1 trillion contingency fund that stems in part from a rosy economic forecast, domestic spending cuts that Congress may resist and omission of any future defense spending increases.

Still, the Democrats already have gone part way toward Mr. Bush by advocating a tax cut of nearly $1 trillion, and Republicans remain confident he can get most of what he seeks. Sen. Phil Gramm, R-Te.s, said that he thought Congress ultimately would approve about a $1.6 trillion cut and that 65 senators, meaning at least 15 Democrats, would vote for it.

And both Mr. Bush and the Democrats have defined the terms of the debate, just as was the case at the similar moment in 1981.

Mr. Reagan won his battle for a big tax cut and for many spending cuts. But he suffered politically as deficits ballooned amid a severe recession, and the GOP took a bath in the 1982 elections.

However, he won in the long run when the economy recovered in time for him to win re-election, and his legacy of deficits was wiped out by the boom of the1990s.






Carl P. Leubsdorf is Washington bureau chief of the Dallas Morning News.

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