Former President George W. Bush defended his tax cuts while suggesting that their link to his presidency may render them politically untenable, as he made a rare foray into the economic policy debate since leaving the White House.
Bush, appearing in New York yesterday at a conference hosted by his presidential foundation the Bush Institute, indirectly criticized President Barack Obama’s proposal to raise taxes on high earners, saying the cuts enacted during his own first term on income, investments and inheritances should be maintained.
“I wish they weren’t called the ‘Bush tax cuts,’” the former president said as he opened the conference, drawing laughs from an audience of supporters, economists and academics. “If they were called some other body’s cuts, they’re probably less likely to be raised.”
The event wasn’t a political one and Bush -- who unlike his father, former President George H.W. Bush, and brother, former Florida Governor Jeb Bush, hasn’t endorsed presumptive Republican presidential nominee Mitt Romney -- didn’t signal whether he intends to play a role in this year’s campaign. Still, Bush’s appearance and his comment about his signature tax cuts highlighted the degree to which his legacy is forming the backdrop of campaign debate over the nation’s fiscal future.
‘Engage and Defend’
“The Obama team is making the Bush economy a centerpiece of the economic debate, so at some point, you have to make a decision whether you engage and defend your record and say why it’s worthwhile or leave it to others, and I know the president doesn’t like to do the latter,” said Trent Duffy, a Republican strategist with the Washington-based firm HDMK and a former Bush White House spokesman.
“The timing is such that I do think the president wants to defend the decisions he made, and he has the right to do that, especially when they’re under withering criticism,” Duffy said.
Bush’s tax policy conference, the stated goal of which was to develop ideas to foster an economic growth rate of 4 percent, came on the day Obama traveled to the swing state of Florida to make the case for setting a minimum tax rate for top earners as a matter of fairness.
In a speech yesterday in Boca Raton, Florida, Obama framed the debate over the tax, named for billionaire investor Warren Buffett, as part of a choice between “two very different visions for our future” and a “make-or-break moment for the middle class and everybody who’s aspiring to get into the middle class.”
Taxing Job Creators
Bush said he didn’t intend to undermine the current White House occupant, even as he indirectly targeted his approach.
“I don’t think it’s good, frankly, for our country to undermine our president, and I don’t intend to do so, but I do intend to remain involved in areas that I’m interested in,” Bush said at the start of the day-long meeting that drew Republican governors and former members of his economic team.
“If you raise taxes on the so-called rich, you’re really raising taxes on the job creators, and if the goal is private- sector growth, you’ve got to recognize that the best way to create that growth is to leave capital in the treasuries of the job creators,” Bush said.
Obama and Romney are competing to frame the nation’s fiscal troubles as the fault of the other party. Romney, the former Massachusetts governor whose status as likely Republican nominee got a boost yesterday with his primary rival Rick Santorum’s exit from the race, probably won’t want to tie himself to the economic policies of a president whose fiscal legacy is still controversial, said Matthew Dowd, a former Bush aide who is now a Bloomberg News analyst.
“The Bush brand on the economy is not something either side wants to identify with,” Dowd said. “When he left office and still today, his numbers are not great, so nobody’s out there saying, ‘Let’s do what Bush did.’ Even though Romney has elements of it in his proposal, you don’t hear him saying, ‘We need to return to the glory days of the Bush economy.’”
Karl Rove, Bush’s longtime chief political adviser who helped plan the conference, said organizers had tried “to keep politics out of this.”
Asked how its topic and Bush’s message might play in the presidential campaign, Rove said in an interview: “President Obama -- with all due respect to him, and we’re trying to keep politics out of the conference today -- has got a weak leg to stand on.”
Tax Cuts Extended
“The policies that got us into this are policies that he contributed to,” Rove said of Obama, naming the collapse of Fannie Mae (FNMA:US) and Freddie Mac, two government-backed mortgage firms, as the main culprit in the financial meltdown over which Bush presided.
Rove said while Obama often “suggests” that the tax cuts enacted under Bush helped create the nation’s economic difficulties, he failed to repeal them and acted in 2010 to extend them for two years to spur a recovery.
The so-called Bush tax cuts, enacted in 2001 and 2003, are slated to expire in 2013. They reduced tax rates on income, capital gains, dividends and estates. They also reduced marriage penalties in the tax code.
A budget pushed by the House Republican leadership calls for a revenue level equal to extending the cuts permanently. Over the next decade, that would cost the government more than $4 trillion in revenue. Obama wants to make all of the cuts permanent except for those for individuals making more than $200,000 and married couples making more than $250,000.
Romney has proposed extending all of the expiring tax cuts, and reducing individual income tax rates 20 percent beyond that, putting the top rate at 28 percent and the bottom rate at 8 percent, down from 35 percent and 10 percent today.
Romney’s plan would retain the 15 percent top rates for capital gains and dividends while eliminating taxes on investment income for those making less than $200,000 a year. It would repeal investment taxes and other levies in the 2010 health-care law. The estate tax would be repealed, along with the alternative minimum tax, a parallel tax system designed to prevent high-income taxpayers from legally avoiding taxes.
For businesses, Romney would drop the corporate tax rate to 25 percent from 35 percent and make permanent the research and development tax credit.
Some Republicans said while they didn’t believe Bush was attempting to insert himself into the presidential campaign, his record would necessarily be part of the debate.
“There is no question that it will play into the campaign, because it displays an example of the major differences between Republicans and this president on economic issues,” said Douglas Holtz-Eakin, a Republican economic specialist who advised Arizona Senator John McCain’s 2008 presidential bid against Obama.
Bush “has not endorsed anybody, he has not ever been particularly visible since he left office on issues like this, so now is his chance to step in in more of a statesmanlike role and contribute,” Holtz-Eakin said.
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