As Bush and Democrats fight over who's a better fiscal steward, distortions abound.
Political sparring - the sport of Washington - is quickly becoming a slugfest over who's the better economic steward, threatening once again to confound innocent bystanders (aka the voters).
In one corner is President Bush, warning that Democrats want to raise taxes in the midst of a recession. In the other is the Senate majority leader, a Democrat, blaming the president's tax cut for the recession and resurgent budget deficits.
In truth, say independent economists, both sides are exaggerating - even distorting - the picture. The louder political rhetoric signals the start of election-year politicking, but it also can make it hard for the public to separate fact from fiction.
"We want to keep this in some perspective here," a former director of the Congressional Budget Office (CBO) says of the latest rhetorical froth. It simply is not true that Democrats want to raise taxes, adds Robert Reischauer, but Democrats' own alarm bells are probably louder than they need to be.
Indeed, economists in town point to a little-noticed report by the nonpartisan CBO that rates both parties' economic-stimulus plans - and finds Mr. Bush's to be less effective. Key provisions of the Republican plan offered little "bang for the buck," in terms of helping to revive the economy, concludes the CBO report, released during the holiday lull.
The CBO's highest praise went to a "payroll-tax holiday" - an idea offered by a GOP senator, cheered by Democrats, but distantly received by the White House. Two key Bush proposals, speeding up tax cuts and repealing the corporate minimum tax, would not get the job done, the report said.
In the speech that launched the new round of salvos, many economists note, Senate majority leader Tom Daschle (D) never called for a tax hike. Rather, he advocates short-term tax cuts to stimulate the economy.
But he did rail against the size of the 10-year, $1.3 trillion tax cut Bush pushed and Congress approved last year, implying that cuts scheduled for the future should be frozen or postponed.
"Your average person would view this as a cancelled tax cut," not a tax increase, says Robert Greenstein of the Center on Budget and Policy Priorities here.
Both Democratic and Republican governors, at times, have cancelled or delayed pending tax cuts, Mr. Greenstein says. Even the GOP's legendary tax-cutter - President Reagan - was forced to repeal about one-third of his tax cut because of ballooning deficits.
On the other hand, Mr. Daschle's claims that the Bush-backed tax cut "made the recession worse" and is responsible for "the most dramatic fiscal deterioration in our nation's history" are also distortions, economists say.
In Daschle's view, the recession has been made worse because financial markets, unsettled by possible long-term effects of the tax cut, have not allowed a sufficient drop in long-term interest rates. The Federal Reserve, of course, cut short-term rates for borrowers 11 times last year, but long-term rates - which affect mortgages and car loans - stayed abnormally high.
If long-term rates had declined, Democrats say, US homeowners could be saving $1,500 to $2,000 a year on mortgage payments - better than a tax cut.
True, perhaps, but Daschle left out the fact that the tax cut softened the impact of the recession by putting more money in people's pockets, says Mr. Reischauer. Many Americans got a tax rebate last year, and the first phase kicked in of the cut in income-tax rates. "The tax cut is helping the economy," he says.
Daschle's other claims - that the tax cut has wrought a new era of deficit spending and that the budget surplus "is nearly gone" - mix up two time frames: the short term and the long term. Both parties expect the federal budget to be tens of billions of dollars in the red for the next few years. After that, it should return to surplus.
Daschle can chastise Bush all he wants over deficits, but it's a bit awkward, given that a prominent economist in his own party - Gene Sperling, President Clinton's former economic adviser - says short-term deficits are acceptable, especially during war and recession.
Everyone agrees - and Democrats decry - that the Bush tax cut will dramatically shrink the surplus in the long term. Republicans, for their part, say returning surplus funds to taxpayers is the appropriate use of that money.
Seen through the lens of history, a forecast for even a smaller surplus presents a decent fiscal picture, says Reischauer. "It is not the 1980s and the first half of the 1990s - yet."