After the Tax Cuts
A milder and altered version of the Bush tax-cut plan will likely be signed by the president next week, just four months into his term.
The effects of this trillion-dollar- plus shift of wealth will be felt - and judged - years after George W. Bush's four-year term. Any predictions now of the economic fallout or restraints on government spending are as reliable as a long-range weather forecast. The tax cut was guided more by political choice than economic logic, based on the Bush view of government's role.
The cuts can fairly be said to reflect what voters expected of Mr. Bush. They were his centerpiece promise and his first legislative priority. They are the fiscal fence he wants to put around government, and they reflect his ideas on how to distribute the tax burden between rich and poor.
But, just like Reagan after the tax cuts of 1981, Bush now faces tough decisions on spending, especially given his other promises on defense, education, etc.
Despite his popularity, Mr. Reagan did not have enough political capital to keep Congress from spending beyond the post-cut revenues. That cost the nation dearly in debt, although some economists argue that the tax cuts helped create the economic boom of the 1990s that's enabling a massive reduction of the debt.
Bush's emphasis on accountability in government must now be applied to his own efforts to make sure these tax cuts don't produce the negative sideeffects predicted by critics. The bulk of the tax cuts don't kick in for several years. Still, if the promised stimulative effect on the economy doesn't show up sooner rather than later, both Bush and Congress will need to raise taxes again.
And, of course, Bush, and his approach to government, will need to again face the judgment of voters.
(c) Copyright 2001. The Christian Science Monitor