Don't Halt Deficit Progress by Cutting Taxes
A Democratic senator asks the president to reconsider his tax-cut plan and use the savings to trim the national debt
DEAR Mr. President: Since 1992, your administration and your allies in Congress have brought the nation's annual deficit down from the historic high of more than $290 billion to below $200 billion. That feat - three straight years of deficit reduction - has not been accomplished since Harry Truman lived in the White House.
That kind of fiscal discipline has helped produce solid economic growth. It is the right course. We must not waver in our commitment to balancing our country's books, and we must do it with prudent fiscal policy, including necessary spending cuts.
But the budget you sent to Congress Feb. 6 has a fatal flaw. The $63 billion in spending cuts you plan to use to offset the cost of your new tax cuts should be used for more deficit reduction.
The Republican alternative, with its $196.3 billion worth of tax cuts, is simply irresponsible.
We must resist the powerful urge to cut taxes. We all know the phrase ``tax cut'' is one of the magic elixirs of politics. But scan the label on the bottle, and more often than not, it reads, ``Warning: contains snake oil.'' That oil has a nasty kick and some powerful side effects.
In the 1980s, there were a lot of people taking long pulls from the bottle, and in their intoxication, they promised us prosperity and a balanced federal budget with buy-now-pay-later fiscal policies. Then the side effects kicked in. ``Later'' arrived, and we are paying dearly even as the architects of those policies settle back in comfortable retirements.
But their ideological children, apparently, have learned nothing from that experience. ``Drink up!'' they chortle. ``We can make it all happen again.''
The allure to cut taxes, even when it makes no fiscal sense, is strong. Politicians have been promising to cut taxes ever since they started levying them. Conventional political wisdom says it's stupid to oppose tax cuts.
But this is no conventional time, and tax cuts must wait. Eight members of the Senate, including Sen. Jim Exon (D) of Nebraska, the ranking minority member of the Senate Budget Committee; Sen. Paul Simon (D) of Illinois, a primary sponsor of the Balanced Budget Amendment; and Sen. Harry Reid (D) of Nevada, co-chairman of the Senate Democratic Policy Committee, recently signed a letter with me arguing against surrendering fiscal good sense to tax-cut fever.
Other senators have since joined in, questioning the wisdom of choosing tax cuts over more deficit reduction at this time.
We have been warned, by experts and the general public alike, about the side effects. In December, USA Today and CNBC surveyed 55 economists. Asked about what effects the kind of middle-class tax cuts being proposed at the time would have on the economy, almost two-thirds said those tax cuts would either have no effect or would hurt.
It is obvious the American public understands this just as clearly. Taxpayers recognize the value of the fiscal discipline we have shown since your inauguration in January 1993. They know that hard work, not short cuts, is the way to get us out of the fiscal mess we inherited when we arrived here three years ago.
We can read the results of the polls. A Washington Post-ABC poll conducted in January shows the federal deficit to be at the top of many Americans' lists for action, while tax cuts lagged behind, trailing health-care reform and balancing the federal budget as well. Seventy percent of the respondents in a previous CNN-USA Today-Gallup poll said reducing the deficit is a higher priority than making tax cuts, even though many thought a $500 tax cut would help them.
We hear taxpayers back home say this when they stop us on the streets and in the checkout lines. I hear them clearly when telephone calls to my office are running 10 to 1 against the middle-class tax cut. Presented with this dubious offer, Americans are saying, ``Thanks, but no thanks. Get that deficit paid first.''
Our federal deficit, piled up over 12 years by irresponsible spending and tax-cutting policies, cannot wait. It is a millstone around the neck of every citizen, and the burden it places on all of us is as onerous as any tax.
Republicans have plans for tax cuts for families with combined incomes of up to $200,000. They have not explained just how they're going to pay for it. They haven't produced plans because they can't, not without driving up the deficit and risking higher inflation and interest-rate hikes.
To your credit, Mr. President, you have identified areas in which we can cut spending to pay for your proposed tax cuts. But I say, and a majority of Americans agree, that spending cuts should be used to get rid of this deficit.
Your proposed budget contemplates deficits of close to $200 billion each year for the next decade, adding another $1 trillion to the national debt. That news is chilling enough; the Republican tax-cut plans should freeze us clear to the bone.
A sound national policy requires a sound economy. A sound economy requires confidence in the future. That confidence will come with discipline and long-range thinking. Cutting taxes now is the equivalent of making a down payment on disaster. The Opinion/Essay Page welcomes manuscripts. Authors of articles will be notified by telephone. Authors of articles not accepted will be notified by postcard. Send manuscripts by mail to Opinions/Essays, One Norway Street, Boston, MA 02115, by fax to 617 -450-2317, or by Internet E-mail to OPED@RACHEL.CSPS.COM.