Deceptive appeal of tax-cut bill

Budget-buster: Pressure to boost education, defense, energy could short-circuit tax reductions.

May 31, 2001

THERE ARE, on the surface, some appealing aspects of the president's $1.35 trillion tax-cut bill:

Everyone who pays taxes gets cash back -- as much as $600.

You'll be able to put more money aside for retirement in 401(k) and IRA plans.

Your payroll withholding will gradually shrink.

You'll be able to deduct up to $4,000 a year for college tuition.

Child-care and adoption tax credits are rising.

No one can complain about these provisions, or many others that reduce the tax burden.

But the magnitude of the president's proposal could have far-reaching negative implications.

Some analysts fear the deficit could return next year. What's going to happen in 10 years when the full impact of the tax cuts is felt?

Part of the president's plan -- a longtime goal of Republicans -- is to downsize government. His budget calls for a 4 percent spending increase, half the rate of prior years.

Yet Mr. Bush cooked the books by not allowing for $20 billion in defense initiatives, $24 billion for his education bill and billions for his energy initiatives.

Already, lawmakers are talking about busting the president's budget to make room for these and other programs.

One danger is that Congress, starved for cash, will dip into the Medicare surplus. Since that could ignite a firestorm of protests, lawmakers may have to take back some of the tax cuts they approved this month.

But there's another problem with the Bush plan. To keep the cost down, many tax breaks were made temporary. That $4,000 deduction for college tuition, for instance, expires in 2005. To renew it for another six years would cost at least $20 billion.

There's a fundamental dishonesty in this plan. The tax cuts won't have a major impact on most Americans. Nor are they likely to ease the threat of a recession later this year.

They will, though, help Mr. Bush cut federal spending and leave little money for debt reduction or emergencies.

That's a high-risk strategy foisted on the American public as a simple tax cut. Truth-telling is in short supply in Washington.

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