Tax and spend Dems avoid the subject

NY Times:

President Bush is all but daring Democratic leaders to attack his signature tax cuts as they take over Congress. But Democrats, perhaps to his frustration, are having none of it.

In an opening salvo on Wednesday, Mr. Bush proclaimed that he would present a budget next month that manages to project a balanced budget by 2012 while permanently extending more than $1 trillion in tax cuts.

“It is also a fact that our tax cuts have fueled robust economic growth and record revenues,” Mr. Bush wrote in an op-ed article for The Wall Street Journal. “We met our goal of cutting the deficit in half three years ahead of schedule.”

The implicit message, which Republican lawmakers reinforced later, was that their tax cuts were popular with voters, that Republicans had proven the economic benefits of tax cuts and that Democrats would court disaster if they even hinted at rolling them back or repealing them.

But even as Democratic leaders continue to accuse Mr. Bush of having a reckless fiscal policy, they have refused to discuss dismantling his tax cuts or even to engage in a debate with him about the best way to stimulate economic growth.

“It’s always the same old tired line with them — ‘Tax and spend, tax and spend, tax and spend,’ ” said Senator Kent Conrad, the North Dakota Democrat who is chairman of the Senate Budget Committee. “We’re not going there.”

At least not now. Democratic leaders say they see no need to revisit Mr. Bush’s tax cuts for several years because they are not set to expire until the end of 2010. And they contend that the government could increase revenues as much as $100 billion a year simply by closing the “tax gap,” taxes that are owed but not paid.

When asked about their tax plans, as they have been again and again since Nov. 7, Democratic leaders insist they want to preserve many of the middle-class tax cuts like the child tax credit and a reduction in the so-called “marriage penalty” for two-income households.

The Democrats’ coyness is less than candid. Although it is true that Mr. Bush’s tax cuts have four more years of life, it is also true that Congress faces serious fiscal headaches that cannot be postponed for even a full year.


Perhaps the bigger and more enduring problem is the alternative minimum tax, a tax that was originally intended for the richest households but that has been not adjusted for inflation and is rapidly engulfing tens of millions of middle-class families every year.

To prevent the alternative tax from becoming a de facto tax increase, Congress has been passing temporary fixes for the last several years. Those fixes now cost more than $50 billion a year, and the cost is expected to climb sharply for the rest of the decade.

Repealing the alternative minimum tax, a goal shared by Democrats and Republicans, would reduce government revenues by about $1 trillion over the next 10 years and would be a huge drain on the Treasury that nobody in either party has figured out how to finance.

You can count on them not to continue the top end reductions. Take it to the bank. You can also count on them to raise social security taxes, especially for the top tax payers. That has been the dirty secret of their opposition to real reform of social security that would have given investment opportunities to those willing to participate. You can tell when Democrats know they are on the wrong side of the voters, they do not want to admit their agenda.


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