BUSH COMPROMISES ON TAX CUT

The Washington Times ^ | April 16, 2003 | By Bill Sammon

[Uncle Bill]

President Bush yesterday scaled back his proposed tax cut by nearly 25 percent in an effort to prod Congress into passing the measure in time to stimulate the economy before next year's election.

After insisting for months that he would not budge from his 10-year cut of $726 billion, Mr. Bush yesterday endorsed a $550 billion compromise that was passed by the House. The Senate is pushing for an even smaller cut of $350 billion.

[Ben Ficklin]

Third-graders understand the concept of starting high.

[Libertina]

Agreed. Some is better than none. And it is OUR responsibility to elect Big C conservatives into the Senate and House. That way our President will have backing for his priorities. He is not a king who can snap his fingers and get his way. NOw we should get out there and make the 2004 elections more sweeping than those of 2002! Get rid of L'garbage... ;)

[Uncle Bill]

Third graders can spot a socialist spender.

[KriegerGeist]

"And it is OUR responsibility to elect Big C conservatives into the Senate and House."

...And, it would be nice if those big C conservatives could be from minority ethnic groups such as black, Hispanic and Asian.

I really want the liberal-socialista-hypocrite-elitist-DemonRATS not only out, but true big C conservatives that will grab the minority votes.

I want them not only to lose their seats, but their base constituency voters forever.

[KriegerGeist]

"How about just eliminating the entire federal income tax code, abolishing the IRS, and instituting a national retail sales tax.

That would be the economic boom of all booms.

G.W. Bush may not be able to get it now, but he is seriously considering it for the future:

Consumption Tax Theory
TownHall.com
by Bruce Bartlett
Tuesday, February 11, 2003

Last Friday, the President Bush issued his annual Economic Report. Press coverage focused heavily on the chapter relating to taxation. The lead was that President Bush favors a shift toward consumption taxation.

As is so often the case, the news stories gave the barest hint of what the report actually said. And the spin was designed to frighten voters into thinking that a new tax was being imposed on top of all the others, one that will be especially injurious to the poor.

In fact, the Economic Report was more of a philosophical discussion than a concrete proposal. But the points that it makes will be central to any effort at fundamental tax reform.

The idea of taxing consumption rather than income has been around for almost 500 years. In 1651, the philosopher Thomas Hobbes wrote in "Leviathan" that taxing what people consume is more fair than taxing what they earn. The former, he thought, represented what people take out of society, while the latter showed what they contributed.

Hobbes asked, Why should a rich man who saves much and consumes little be more heavily taxed than one of modest means who consumes all he earns and more by going into debt?

The first is giving something to society by saving, while the second makes society poorer.

At almost the same time, Sir William Petty also made a strong case for taxing consumption on the grounds that the goods and services that people consume are a truer measure of their well being than what they earn. "Every man should pay according to what he actually enjoyeth," Petty wrote in 1662. And taxes should be light on those "who please to be content with natural necessities." I bring this history up only to indicate that taxing consumption, rather than income, is not a radical new idea, but one that has a long and distinguished pedigree. It fell out of favor in the 20th century because of Keynesian economics and the popularity of income redistribution as a central tenet of liberalism. Keynes saw saving as bad for growth, and income taxation discourages saving by including it in the tax base, which would not be the case under a consumption tax. And income taxation also supported liberalism by justifying heavy taxes on forms of income mainly accruing to the wealthy, such as capital gains and ividends.

Unfortunately, the 20th century's greatest champion of taxing consumption, economist Irving Fisher, got the reputation of being a bit of a crank and thus did not have the influence that those favoring income taxation had. The latter had their greatest success in the 1960s, when the tax expenditures concept was developed. Henceforth, all deviations from a theoretically perfect income tax would be considered illegitimate and Congress often abolished them when looking for new revenue.

The case for taxing consumption had a revival in 1977, when the Treasury Department issued a study titled, "Blueprints for Basic Tax Reform." However, since it was a Ford administration initiative that came out just three days before Jimmy Carter took office, it went nowhere legislatively. But it did have a profound impact on those who think about tax policy and really made the idea respectable again.

The principal author of the Blueprints study, economist David Bradford of Princeton, has continued to write extensively in favor of its basic outlines.

Consumption-based taxation would have made more progress in the years since except that a few eccentrics got the idea that the entire tax system needed to be rooted out and replaced with a retail sales tax, like those at the state level. This is a silly idea that never had any chance of enactment and would be impossible to implement if it were ever tried.

What the Bush administration proposes is something much more sophisticated and workable. It wants to work within the existing tax system to get rid of taxes that burden saving and investment. If this were done consistently, we would have a tax system that falls only on consumption, without the administrative and political problems inherent in trying to tax sales directly.

Supplementing the effort to explain this initiative, President Bush has included a section in his new budget detailing specific deviations from a consumption tax base. (Look on page 130 in the Analytical Perspectives volume.) Taken together with the Economic Report, these constitute the most powerful case for consumption taxation since the 1977 Blueprints study, and the first to come out of the White House itself.

[Spirited]

"I'm shocked, shocked I tell you, to learn that Bush is going soft.

He's racking up a clear record as a "moderate," not a "compassionate conservative," to use his own weasel words. Goldwater wouldn't be happy with that "compassionate" prefix, because it suggests conservatives aren't--something the liberals love to say. Goldwater's book, _The Conscience of a Conservative_ addresses that very point, except in Goldwater's day they called themselves "progressive conservatives." LOL!

Bush is also going to keep the assault weapons ban, lots of bad news this week. Ah well, like father, like son. All in the family: the Order of the Skull and Bones family.

Shocked! Who would have thunk!"

No sense in composing something when there is already a post which says what one would have said. So reprint.....

[Libertina]

Well, after the way they treated Estrada, you might get your wish. (Hispanic) Constituency gone - forever...

[mo]

This issue is critical to the GOP. Everytime we play the tax cut game we play right into the Democrats' class warfare plans. The only way out is by re-writing the game-abolish IRS and replace with a different way of getting the job done that is less divisive. Here's hoping team Bush sees this.....else we'll all be hearing about "read my lips redux......"

[TLBSHOW]

Bookmarked........

[LS]

Glad he's all mine. I'll take him. Now, run along to the anarchist party, or wherever you do policy on other planets. It sure ain't this one.

[ModernDayCato]

Agree (even with the sarcasm), except that I would say W leans liberal, not moderate.

[LS]

You are right. He won't. Now, do you want to talk fantasy governments here or REAL, LIVE, 2003 governments?

Disgust with the UN is building. It isn't there yet.

As for Africa, any person any time can carp about how billions of dollars are being spent. But the fact is that only two presidents since 1964 have proposed tax cuts: Reagan and Bush. Instead of whining, try some support. Moreover, history shows that if the tax cut is big enough, the economy grows faster than government, which means that government's share shrinks. It did in the 1920s.

[CroftonFreeper]

I look at it like this. ANY tax cut is a victory. The fact that the argument is not, NO tax cut, but how much of one is great progress.

A Bush victory in 04, there will be more cuts. I'll take the cuts anyway they come. Thats my story and I'm stickin to it. QUIT WHINING

[Anamensis]

I'm very supportive of Bush. I have the bumper stickers to prove it. Doesn't mean I agree with every single solitairy thing he does, and those are two things I disagree with, and I'm going to say so.

[Miss Marple]

You know, you can refute with logic everything Uncle Bill says, but it won't make any difference to him. He will simply move on to another issue and produce 137 links "proving" that President Bush is a liberal.

It never stops.

[brewcrew]

"By any measure, 'Bushonomics' has been an abysmal failure," said House Minority Whip Steny H. Hoyer, Maryland Democrat.

"Since President Bush took office, 2.5 million Americans have lost their jobs, the number of Americans without health insurance has risen by 4 million, about $1 trillion worth of corporate assets has been foreclosed on, and 2 million Americans have slid backward from the middle class into poverty," he said.

This old class division crap has become so tiresome. Never any mention of how many jobs have been created, how many people have actually acquired health insurance, how many new corporate dollars have been borrowed and invested, or how many people have actually improved their position.

I'm not saying the latter groups have exceeded the former, only that they've been offset. In a booming economy, the latter outweighs the former.

[SSN558]

The 2000 bubble was caused in part by government spending on Y2K. We had a lot more government spending due to the war on terror. Now the CEO's are sitting on their fat asses waiting for another gubmint handout. They need to be weened off the nipple before the economy starts growing again. Tax cuts do not produce immediate growth of the economy like stimulus spending, it will take a year or two.

[goldstategop]

We can't get everything we want from a Senate controlled by RINOs. Let's face it: we'll still get a sizable permanent tax cut. If the Senate were controlled by Tommy Daschund and his party that answer would be NO. As bad as you think RINOs are they're still better than Democrats.

[TLBSHOW]

Graham told me. "I'm not going to vote for this. We'll have a (tax) bill that meets the president's specification, or we'll have no bill at all."

He added, "Conservatives can control spending and cut taxes. If we don't, we are drifting." The feisty South Carolinian made clear that Frist is no Gingrich, but that this fiasco cannot be repeated.

http://www.freerepublic.com/focus/f-news/897080/posts

uncle bill may be right there will be no tax cuts at all...

[Uncle Bill]

Quiet Deals, New Rules Threaten Bush Tax Cut

By Carl Cameron and Julie Asher
April 17, 2003
Source

WASHINGTON — A handful of Senate Republicans are infuriated with their leaders for the way President Bush's tax cut was handled before a budget resolution vote last week.

The anger has not yet reached the level of a revolt but it has become a problem for new Senate Majority Leader Bill Frist of Tennessee.

South Carolina Sen. Lindsey Graham, who voted for the non-binding budget resolution and $350 billion tax cut last week attached to it, said he will oppose any tax cut that small when the tax cuts come up for a vote later in the year.

Graham is blasting Frist, Majority Whip Don Nickles of Oklahoma and Senate Finance Committee Chairman Charles Grassley of Iowa, accusing them of violating a deal that Republicans in the Senate, House, and Bush administration were counting on to get the biggest tax cut possible.

Bush had wanted a $726 billion tax cut, but with Democrats and moderate Republicans saying the cut is too big during times of war and deficit, Republican leaders began looking for the best alternative they could get.

The deal they had reached was for the Senate to approve the budget resolution with a $350 billion tax cut to be approved later this year while the House would pass a $626 billion cut. The differences between the two versions were to be settled during a conference between Senate and House negotiators that Republicans hoped would bring the number up to $550 billion.

But just before the vote, Grassley announced a different deal that he said had Frist's approval.

"I agreed that I would not return from conference — let me emphasize, I would not return from conference on the growth package — with a number larger than $350 billion in revenue reductions," Grassley said in what appeared to be an effort to get moderates Republican Sens. Olympia Snowe of Maine and George Voinovich of Ohio on board.

The House ended up passing a $550 billion tax cut resolution.

On Tuesday, in an economic speech, the president suggested that he would settle on the $550 billion.

"We need tax relief totaling at least $550 billion to make sure our economy grows," he said.

But Graham and House Republicans say Grassley's late comment may have ended killing any chance that Republicans would be able to get larger cuts during the conference negotiations. Offended Republicans in the House accused Grassley of making a "secret deal" that undermined the president's tax cut agenda.

"It was a secret. I didn't know, the speaker didn't know, the whip didn't know, the committee chairman didn't know, and the president of the United States didn't know," said House Majority Leader Tom Delay of Texas.

Said to be most furious among Republicans is Vice President Dick Cheney, who appeared in the Senate on Friday expecting to cast a tie-breaking vote on a $350 billion tax cut that could be increased later in the year. Cheney was apparently broadsided with the news that Senate Republican leaders had cut a new deal making an increase all but impossible.

For many Republicans, the arrangement between Grassley and Frist amounts to the first real screw-up since Frist became majority leader. Some Republican House members are openly questioning his credibility. The White House is angry with the outcome and fear the president's tax cut is in jeopardy.

But with few Republicans willing to criticize openly their leader, much of the blame in the Senate is turning to Senate Parliamentarian Alan Frumin.

Frumin, whose job is to act as a referee on Senate activities, had been asked by GOP leaders last week to rule on a procedural move they hoped would ultimately have made the $550 billion compromise immune to a filibuster, which requires 60 votes to overcome. Republicans say Frumin, appointed by House Minority Leader Tom Daschle, initially ruled in their favor, allowing the strategy to move forward, but then reversed course and wrote a letter to Daschle saying just the opposite. That turnaround is what forced a Republican compromise.

Several senators have expressed anger at Frumin's ruling and have called on Frist to fire him. So far, Frist has only committed to "reviewing" Frumin's ruling.

But Graham has gone public with his complaints about Frist, and his record in the House demonstrates his experience with dogging his leaders. As a House member, Graham, who joined the Senate this year after eight years in the House, was a central figure in the coup against then-House Speaker Newt Gingrich.

For his part, those close to Frist admit that he made a mistake and "blew the play," and they acknowledge that any efforts to move ahead when lawmakers return from their Easter vacation in two weeks, could be tense.

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