Bush, Democrats fighting war of words on tax cuts

La. cheers president

Kennedy to offer plan

January 16, 2002|By David L. Greene and Karen Hosler | David L. Greene and Karen Hosler,SUN NATIONAL STAFF

WASHINGTON - President Bush played to a crowd in New Orleans yesterday, extolling tax cuts as the right medicine for an economy in recession. He warned that Democrats disagree and believe instead that "to come out of a recession, you should raise taxes."

"No!" the crowd yelled, taking Bush's cue.

"I don't know what economic textbook they've been reading," Bush said of the Democrats. "But it's not the one that most Americans have read."

It was the latest salvo from the White House and Republicans, who have embarked on a public relations blitz, accusing Democrats of stealthily trying to raise taxes.

"I have not heard one Democrat say he or she wants to raise taxes," said House Minority Leader Richard A. Gephardt of Missouri. "This is a partisan blame game, and it has no place in the debate about the future economic health of this country."

The war of words between the two parties - one likely to resonate for months in this congressional election year - could hinge on how one defines a tax cut.

Republicans argue that reducing the $1.35 trillion tax cut that Bush sought and Congress passed last year would amount to a tax increase. Many Americans, they say, have been managing their finances on the expectation of further tax cuts.

Democrats beg to differ. Many want to tweak elements of the Bush tax cut that would not go into effect for several years. The lagging economy and projections for smaller-than-expected budget surpluses, Democrats say, demand a re-examination of the tax cut.

Voters are sure to get an earful about tax cuts this year, as both parties jockey for a position they hope will connect with voters. The effort to label Democrats as favoring a tax increase has emerged as a theme for the November elections, which will determine who controls Congress beginning in 2003.

Sen. Edward M. Kennedy of Massachusetts is expected to propose today that portions of the tax cut be canceled.

Only a few other Democrats have gone as far in seeking to rescind parts of the Bush tax cut. Many, including Gephardt and Senate Majority Leader Tom Daschle of South Dakota, have remained silent on whether the package should be revised. Some have suggested that the tax cut might have worsened the recession and that it should be revisited.

The reality is that neither party has enough votes to take any major action that the other opposes. And many analysts say that the solutions Democrats and Republicans are squabbling over would probably be too modest or too late to have much effect on an economic recovery.

Still, the ability of each side to cast the other as economically irresponsible could affect the outcome of congressional elections - and perhaps the 2004 presidential vote.

Senate Minority Leader Trent Lott entered the fray yesterday, saying that today marks the roll-out of the Daschle-Kennedy tax increase. "For 10 days, we've said that the Daschle tax increase was coming," the Mississippi Republican said. "And now we see that Senator Kennedy will propose it."

Ari Fleischer, Bush's spokesman, called Kennedy's plan a "mistake."

"The president thinks that raising taxes in the middle of a recession is the worst thing he can do," said Fleischer. "People have been promised more money in their paycheck, and they're making plans because they're going to have more money in their paycheck. If now you tell people, `We're going to take that money out of your paycheck; you're not going to get it,' that's a tax hike."

The sharp jabs from Republicans have forced Democrats and their supporters into a defensive stance, insisting that their efforts are being mischaracterized.

"When someone says `tax increase,' you think of raising taxes now," said Joel Friedman, a senior fellow at the liberal Center on Budget and Policy Priorities. Democrats, he said, "are not taking any cash out of people's hands today."

Friedman said Democrats are responding to new projections that show the government will have smaller surpluses in future years. Bush is being inflexible, Friedman said, by refusing to concede that later phases of his tax cut might have to be revised, lest they push the government into deficit spending for the foreseeable future.

But Stephen Moore, an economist and president of the conservative Club for Growth, insisted that Bush's tax cut is now "the law of the land" and that "if you change it, you're raising taxes."

Moore labeled Daschle's speech, and other criticism of Bush's tax cut, "a strategic political blunder, because it defines Democrats as the pro-tax party."

Bush, who could pay a stiff political price for a persistent recession, stands to gain by branding Democrats as resistant to what he calls the right prescription for economic health: deep tax cuts.

"The economy was clearly in bad shape when Bush took office," Moore said. "But he is also responsible for turning things around."

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