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Many Americans to lose if Bush hits his trifecta Palm Beach Post Editorial Sunday, February 16, 2003 It was like the old days. In his semiannual lecture to Congress last week, Federal Reserve Chairman Alan Greenspan insisted that budget deficits matter. Famous Republicans from Calvin Coolidge to Bob Dole talked like that. Famous Republicans of today say deficits don't matter. "Contrary to what some have said," Mr. Greenspan said -- substituting some for White House Budget Director Mitch Daniels' name -- a high deficit "does affect long-term interest rates. It does have a negative impact on the economy." Uncharacteristically, he even gave a figure for a deficit level that he deems manageable: up to $200 billion. But not $300 billion, where the White House budget is. "Faster economic growth, doubtless, would make deficits far easier to contain," Mr. Greenspan added. "But faster economic growth alone is not likely to be the full solution to currently projected long-term deficit." Accepting the strange notion that deficits don't matter is a necessary precondition of doing what the White House is trying to do. The deficit grows because the budget is trying to hit another of President Bush's trifectas. It aims at stimulating the economy, starving domestic programs and cutting, or eliminating, taxes on wealth. Take the goals one by one: � What Mr. Greenspan calls "geopolitical risks" undercut any economic stimulus now. Uncertainty about war on Iraq is a drag on business planning, and it doesn't help sales when Homeland Security Secretary Tom Ridge warns consumers to be wary of "soft targets" such as malls. Mr. Bush's foreign policy may do wonders for sales of duct tape, but it's unlikely that any stimulus can help until the future is clearer to people deciding on purchases or investment. � Using tax cuts to discourage Congress from starting new programs has been on the GOP agenda since the 1980s. "It is wrong to allow surpluses," says Hoover Institution economist John Cogan, "because these surpluses inevitably lead to higher spending." Republicans in power, though, spend like Democrats. After restraint during the 1990s, federal outgo again exceeds income. As the man who signed the bloated $170 billion 2003 farm bill and has proposed a bloated Pentagon budget, Mr. Bush can't credibly promise spending restraint. When he throws tax cuts into the mix, he can't avoid deficits. � Mr. Bush wants to wage war and cut taxes simultaneously. The pairing is unprecedented because it is so obviously reckless. He wouldn't risk it if tax cuts didn't rate as high in his scheme of things as regime change in Iraq. His tax proposals tilt toward shielding capital rather than wages. More than half of the $674 billion in the latest round of cuts, for instance, would go to taxpayers who collect dividends on personally owned stocks, not stocks in mutual funds. His cuts shift the costs of government from wealth to income, or from the fastest-growing part of the tax base to the slowest. Aside from being unfair, that philosophy necessarily requires him to live with deficits and defend them. Mr. Greenspan's last word was that economic stimulus won't take effect until war and rumors of war stop dominating the news. Mr. Bush's final word is tax cuts. Economic stimulus is the shaky excuse, and deficits are the inevitable result. _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
