In reality, Bush cranked up his spin machine, got great publicity, and avoided the details that can get him in trouble. And lost among Bush's photo ops with working families and his bipartisan cuddle-ups with Democrats was the biggest detail of all: The President can't possibly do everything he's promising within the framework of his own plan. As a result, as the bill wends its way through Congress, one of two things is going to happen. Either the tax cut will get even bigger -- something I suspect is unlikely, despite the drumbeat of a bidding war. Or some key elements of Bush's plan are going to be jettisoned, with his tacit support.
"CURRENT PLAN." What Bush won't tell us, of course, is exactly what he's going to chuck when his tax bill gets into trouble. The other day, my colleague, BusinessWeek economic correspondent Rich Miller, asked top Bush economic adviser Larry Lindsey which would go first: bigger tax reductions or rate cuts in the Prez's campaign proposal. Lindsey's careful response: "The President's current plan is between $1.5 trillion and $1.6 trillion." Remember that word "current."
Here's the math. The President would cut five tax rates of 39.6%, 36%, 31%, 28%, and 15%, respectively, to four rates of 33%, 25%, 15%, and 10%. He'd also double the child credit to $1,000, repeal the estate tax, ease the marriage penalty, and provide a fistful of other tax breaks for everything from buying health care to helping teachers buy pencils. Most of those proposals were supposed to be phased in slowly over the next decade. None would kick in this year. The rate cuts, for example, wouldn't fully take hold until 2006.
But Bush now wants Congress to do some touching up for him. First, he wants to speed up delivery of the tax cut to this year. And after months of fudging, aides now acknowledge he'll have to do something about the alternative minimum tax. Right now, about 1.3 million taxpayers get hit by the AMT, a separate tax imposed on those who have claimed lots of deductions and credits. Because the income levels at which the tax kicks in aren't indexed for inflation, about 15 million will be hit with the AMT by 2010. And under the Bush cuts, an additional 12 million would get hammered. That means, unless Bush fixes the AMT, up to 27 million taxpayers who have been promised a tax cut may get a lot less than they anticipated.
SEVERAL SHAVES. These changes may sound small, but look again. Accelerating the rate cuts to this year would lose the U.S. Treasury $250 billion in anticipated revenues for 2001. And indexing the AMT could cost the Treasury $200 billion more. Just those changes would increase the size of Bush's official plan by 25%.
So, where's that money going to come from? My bet is that Bush and congressional tax writers will shave some here and shave some there. The estate tax, which Republicans love to call the "death tax," will be scaled back. It won't be repealed. Top-bracket rate reductions will be less generous than Bush promised. And there will be less of that quick, antirecession tax cut than Bush is leading you to believe.
Later this year, when Congress makes such changes, Bush will blandly lay the blame on Capitol Hill. If the tax cut gets bloated, or if some of his promises get scaled back, it won't be his fault. But of course, in the interests of bipartisan harmony, Bush will sign the bill anyway. And then claim credit for a triumph.
For now, Democrats are giving him the luxury of having it both ways. Knocked back on their heels by Bush's tax-cut blitz, Democrats are scrambling to come up with some alternative. But until they get in the game, Bush will continue to have center stage on taxes. And he'll keep trying to get away with making promises he'll never be able to keep. Gleckman is a senior correspondent in Business Week's Washington bureau. Follow his views twice a month in Washington Watch, only on BW Online