Be careful with tax cuts

Baseball, it is said, is a simple game. You throw the ball. You hit the ball. You catch the ball.

But of course, anyone who watches games regularly knows it is a lot more complicated than that. There are games inside the game, situational calls - and when Roger Clemens is pitching there's the chance you may get a bat thrown at you.

The simple answer may be poetic truth, but try to manage a team based on those principles and you will soon discover holes in your game. The principles may be true in some broad sense, but they are not a coaching strategy.

And so it is with politics: Beware the simple answer, for it may sound good in theory, but there is more going on in the game.

The best example of this is the current debate over the economic plans of Vice President Al Gore and Texas Gov. George W. Bush.

Mr. Gore says he wants to use the surplus to pay for things like education programs, defense, and prescription drugs for seniors, and adds in some targeted tax cuts.

Mr. Bush, meanwhile, says he wants a trillion-dollar tax cut and smaller increases in education and defense, while pledging some Social Security money to young people so they can invest it now.

In the debates and on the stump, the argument between the two of them sounds something like this: Gore wants to spend more to fix government programs. Bush wants to return the money to taxpayers because he "trusts the people, not Washington."

But this is a serious oversimplification.

In truth, both these plans run a serious risk of breaking Washington's No. 1 rule of the last eight years, "First, do nothing to upset Alan Greenspan."

But in the end, the changes brought about by Bush's budget are more dramatic and potentially could cause more serious harm.

Bush's words about "trusting the American people" touch that antigovernment chord that lurks in the heart of every American (after all, who doesn't want to be trusted), but it misses the point.

Tax cuts aren't just about "trusting people." They are about generating economic growth.

And that is something Alan Greenspan and most financial analysts do not want when the economy is humming along as it is now. Any more growth and this country, already teetering on becoming inflationary, may fall headfirst into the money pit.

Of all the claims Bush and Gore make about Bush's cut, there is one certainty: Giving people a $1 trillion tax cut will create spending.

That's what Americans do. Even after eight years of good times, Americans are spending like teenagers with their first credit cards.

That spending will create growth, and that growth will make Mr. Greenspan raise interest rates.

Now, it is valid to say that Gore's government spending will also probably raise interest rates - not to mention his proposed tax cut - but not to the same extent as Bush's because it won't create the same amount of growth.

What's more, if it is spent smartly - and not all of it as currently proposed - it can fix some of the long-term problems we face in education and healthcare.

Of course, no one's proposals are going to become law by dictate. There are 535 voices at the other end of Pennsylvania Avenue that are going to have a few things to say, not to mention public opinion and, of course, Wall Street.

But the economic proposals the president makes will help steer the course the country takes with a brand new set of circumstances. What do we do with the string of government surpluses projected into the near future?

The answers about trust and the fear of big government are tempting because they are simple. But sometimes the simplest answer can be the trickiest of all.

You throw the ball. You hit the ball. You catch the ball. But there's a lot more to the game.

(c) Copyright 2000. The Christian Science Publishing Society

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