Washington Outlook
The Budget Mess: The Dems May Be Fumbling the Ball
Responding to a slumping economy, the first-year President proposed a bold tax-and-budget plan. Opposition lawmakers ridiculed the proposal as an irresponsible scheme that would wreck the economy for years to come.
That has been the Democrats' tack since President Bush proposed his tax cut in January. The I-told-you-so chorus got louder on Aug. 28, when the Congressional Budget Office said the government would have to tap the Social Security surplus in 2001--and for several years. "This is not just `the economy, stupid,' it's fiscal mismanagement," says Gene Sperling, a top economic adviser to President Clinton.
But the Chicken Littles should heed recent history before declaring Bush a fiscal failure. Eight years ago, Republicans said Clinton's economic stimulus and deficit-reduction plans would bring recession. What followed was the longest stretch of prosperity in U.S. history--and a big Clinton reelection win. It just goes to show that partisan predictions of doom have a way of looking foolish in the broad sweep of history.
BAD TIMING. True, the current $9 billion shortfall in nonpayroll tax revenues could crimp Bush's plans to hike defense spending and partially privatize Social Security. But while Democrats think the plunging surplus is a disaster for the White House, they should temper their enthusiasm with the understanding that they, too, face significant political risks if they stick to their game plan.
Atop the list: overdoing criticism of the tax cut. The Dems blame Bush's plan for frittering away the surplus in eight months. But the attacks come just as anxious Americans are cashing rebate checks designed to head off a recession. "Democrats are in an awkward position," says Claremont McKenna College political scientist John J. Pitney Jr. "Whether you're a Keynesian or a supply-sider, you believe tax cuts stimulate the economy. The timing works in Bush's favor."
Many liberal economists believe the best way to prevent a raid on the Social Security trust fund would be to cancel future installments of the tax cut. But Democratic leaders think it would be political suicide to call for tax hikes or deficit spending now. That gives them only one choice: cut spending.
That's just the debate the GOP covets. Hill Dems are committed to spending hundreds of billions on a prescription-drug benefit for seniors, education, and cash for farmers. With the kitty falling from $119 billion in May to minus $9 billion, there's no way to fund all that. Democrats are "kicking and screaming because the tax cuts took away their spending money," says House Budget Committee Chairman Jim Nussle (R-Iowa).
Democrats are passing the buck, asking Bush to show them his cuts before they show theirs. House Minority Leader Richard A. Gephardt (D-Mo.) suggests defense, education, and welfare cuts but won't get specific. Republicans, meanwhile, say they're eager to trim spending. "I hope our Democratic friends will not feel any pain and will redeploy federal spending from lower-value to higher-value uses," says Office of Management & Budget Director Mitch Daniels.
While Democrats publicly view the budget mess as a political opportunity, some strategists worry they'll be typecast once again as the party of doom, gloom, and big spending. "The potential for Bush coming out of this looking good is scary," frets one veteran Democratic operative. Like the GOP eight years ago, Democrats can only hope for the worst. While the strategy might pay off in the short term, it's an unlikely road map to the White House in '04. Just ask President Dole.
By Richard S. Dunham
CAPITAL WRAPUP
Garbage As History
Interior Secretary Gale Norton raised a stink when she put the Fresno (Calif.) toxic dump on her first list of National Historic Landmarks. But some Clintonites deserve credit too. In May, members of the National Park System Advisory Board appointed by Norton's predecessor, Bruce Babbitt, voted to confer landmark status on the dump, which was the first to layer and compact its trash. Norton, unaware that the site has been on the EPA's cleanup list since 1989, O.K.'d the decision on Aug. 27. But garbage in, garbage out: Norton dumped the historic status a day later when the sludge hit the fan.
CAPITAL WRAPUP
Ever-Expanding Tax Cut
How big is Bush's tax cut? The Congressional Budget Office says it will cost about $1.3 trillion through 2011. But many of its provisions expire, and the entire plan is repealed in 2011. Bush vows to make the cuts permanent. CBO says that would up the cost to $1.7 trillion. Add the interest on the borrowing needed to fund the plan, and the price tag goes to $2.2 trillion.
CAPITAL WRAPUP
Constituent Service
James Buchanan, widely considered one of America's worst Presidents, does not get much respect, but one congressman says he deserves federal aid. Joseph R. Pitts, a Republican who represents Buchanan's hometown of Lancaster, Pa., wants the feds to subsidize upkeep of the burial sites of Buchanan and 28 other Presidents whose graves are not maintained by the National Park Service. Pitts, usually stingy with government funds, says he wants to guarantee ex-Presidents dignity in death.
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Copyright 2001 , by The McGraw-Hill Companies Inc. All rights reserved.
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