Domestic Strategery
EDITORIAL Domestic Strategery Maybe we shouldn't worry. President Bush is bravely pushing ahead to introduce personal investment accounts in Social Security and to save the system from insolvency....
...While Bush's budget proposal for 2006 will assume the tax cuts are permanent, that's not the same as actually enacting them as such...
...Still, we worry...
...This is political turf where others, including President Reagan, have feared to tread...
...But neither he nor his aides have ruled out raising the ceiling on income subject to payroll taxation, currently at $87,900...
...Thus he's been "deliberately mushy" on the tax ceiling, an aide says...
...Our worry, however, is the signal this sends to Democrats and financial markets that the Bush tax cuts could be negotiable, that the president might give up some of the cuts to achieve other goals...
...Fred Barnes, for the Editors...
...In an otherwise attractive compromise on Social Security, a small hike in the ceiling—to, say, $92,700—may be acceptable...
...The crown jewels of the president's first term were his tax cuts on individual income, capital gains, and dividends...
...The president sought congressional approval of this last year but came up short in the Senate...
...Let's start with taxes...
...It's certainly conservative enough...
...Our worry is that a few missteps might deny him the success that is now within his grasp...
...That won't help attract Democrats to Social Security investment accounts, but neither will tax increases or austerity...
...Reagan succeeded by elevating tax cuts and defense spending over deficit reduction...
...And Bush is poised to press later this year for an overhaul of the tax system, making it simpler and produc-ing—we hope anyway—lower rates and a broader tax base...
...The White House has balked...
...The president was barely able to cajole enough House Republicans into supporting a Medicare prescription drug benefit in 2003 when he argued it was needed for his reelection...
...They lifted the economy out of recession...
...We say this based not only on a few hints or evasions by White House officials, but also on several of Bush's strategic decisions about how he's going to deal with Congress this year on taxes, Social Security, and the budget deficit...
...In Bush's case, overemphasis on the deficit is already pinching defense spending and preventing the adoption of the one worthwhile proposal of the Kerry campaign, adding 40,000 troops in two new Army divisions...
...Now Senate Republicans have a bigger margin...
...That would be a mistake—one worth worrying about...
...The best recipe today for deficit reduction is an economy stimulated by permanent tax cuts and tort reform...
...The president says he refuses to "negotiate with himself" on the precise terms of Social Security legislation...
...Neither frugality nor tax hikes will eliminate the deficit...
...But the White House has its reasons...
...But anything more than that is likely to drive away House Republicans and kill reform...
...It fell $103 billion from the projected level in 2004 largely because of an aroused economy...
...Finally, there's the deficit...
...Without them, Bush probably wouldn't have been reelected...
...Growth was the key in the Clinton years as well—to the surprise of Clinton's own economic team...
...The obvious next step is to make these cuts permanent...
...Bush's record in resisting tax hikes has been exemplary...
...Republican senator Lindsey Graham of South Carolina has proposed $200,000...
...AARP wants a $140,000 cap (with no investment accounts...
...This is a noble goal, and one of Bush's most admirable traits is that he keeps his word...
...Why, then, are we a bit anxious about the president and his daring domestic agenda...
...On Social Security reform, our chief worry is getting it through Congress...
...But while cutting the deficit is important, it shouldn't be the top priority...
...He no longer has that argument...
...Let's be clear about one thing: Raising the ceiling constitutes a tax increase...
...The president has promised to cut the deficit in half by the end of his second term...
...So he is living up to his reputation for dismissing lesser issues as "smallball" and saving his time and political muscle for more significant matters...
...One is that making the cuts permanent might undercut its bargaining power in the battles over Social Security and tax reform...
...President Bush's eagerness to carry forward the conservative revolution in Washington begun by Reagan is all to the good...
...Why not try to lock in the tax cuts as soon as possible...
...Bush says he won't do that...
...In his second term, Bush told new members of Congress last week, he intends "to confront problems, not pass them on...
...What could doom Social Security reform is increasing payroll taxes...
...The pressure to raise the ceiling much higher will be enormous...
...The problem is that the White House seems, at times and perhaps inadvertently, to be headed toward undermining its chances of bringing the agenda to fruition...
Vol. 10 • January 2005 • No. 17
