Making the Best of a Bad Lockbox
Making the Best of a Bad Lockbox In a perfect world—heck, in a merely rational world—President Bush's strategy for combating the economic downturn and battered stock market would be obvious: He'd...
...It's the lockbox, stupid...
...It's time for Bush and his aides to get over any concern that new tax relief mocks the president's signature tax cut...
...But then, it's not a perfect world...
...All this can be done without reaching into the Social Security surplus...
...Maybe, but not enough...
...Congressional Republicans are terrified...
...Also, defense spending increases in 2003 and 2004 would become possible...
...We are exactly where we want to be," says Rep...
...Why not...
...But the rest of us have already had our look-see, and while it may be working, it certainly wasn't front-loaded enough to help a stalled economy this year, when help is most needed...
...In truth, Bush isn't required to go along, but he'd risk a nasty split with his closest allies if he decided to spend more of the surplus...
...That surplus, after all, means the government will suck in a projected $158 billion more in revenue than it will spend in 2002...
...After promoting the lockbox as significant and real, how can they now admit it's fiction, shouldn't have been taken seriously in the first place, and ought to be jettisoned...
...They invoked it in 1998 as a tactic to trump President Clinton's insistence that the then-burgeoning surplus should be targeted on "saving Social Security first...
...If the non-Social Security surplus was enlarged through spending cuts, Bush's individual rate reductions could be advanced a year or two...
...From the beginning of the year, denying Democrats the opportunity to spend the surplus has been a major goal...
...He shouldn't be...
...Or in Bush's case, after noisily warning Social Security is going bankrupt and establishing a commission to deal urgently with the problem, how can Bush suddenly say it's fine to dip into the Social Security surplus...
...Yes, embracing a cap gains cut would allow Democrats and the media to say that Bush was tacitly admitting his larger tax cut, enacted in the spring, isn't working...
...For sure, the lockbox has put Bush and Republicans in a bind...
...In fact, the Club for Growth and a handful of Republicans, most notably Sen...
...Making the Best of a Bad Lockbox In a perfect world—heck, in a merely rational world—President Bush's strategy for combating the economic downturn and battered stock market would be obvious: He'd use the huge Social Security surplus to cut taxes, stimulate the economy, and increase stock values...
...Bush sounded cool last week when asked about Senate GOP leader Trent Lott's proposal to trim the capital gains tax rate to 15 percent for two years...
...And it's the right course...
...Instead, they should see it, and explain it, as more of a good thing...
...GOP leaders in the House and Senate met separately, then together, then with the president, and agreed last week on a fresh commitment to not spend a penny of the Social Security surplus...
...And not only to juice up the economy...
...And there's more...
...Fred Barnes, for the Editors...
...They'd rather gamble on an economic turnaround occurring than risk Democratic attacks for raiding the surplus and jeopardizing Social Security...
...Remember, it was Republicans, not Al Gore, who concocted this in the first place...
...Pete Domenici, have advocated this...
...For all their angst over Democratic attacks, Republicans have an unheralded accomplishment to cheer about...
...It's been achieved...
...True, given the soft economy, "it's not quite as comfortable to be where we are as we'd hoped it would be," he says...
...By championing the lockbox even more vociferously than Republicans, Democrats won't get to spend any of the Social Security surplus either...
...Only, for now, it can't happen—unless, as Bush says, we're caught in a recession, war, or national emergency...
...On one level, this makes sense...
...When Republican congressional aides met with Larry Lindsey, Bush's chief economic adviser, a few weeks ago, they were alarmed at how frequently his response to their concern about the economy was, don't worry, the economy will soon recover...
...On Capitol Hill, Republicans worry the White House places too much stock in these predictions (see Stephen Moore's "First, Kill All the Economists," on page 18...
...Actually, Lindsey could have turned the table on them by pointing out that Republicans in Congress put the administration in a straitjacket by insisting on fealty to the lockbox...
...Roy Blunt, the deputy House GOP whip...
...Okay, Republicans said, you want to protect Social Security...
...As luck would have it, there's an agenda Republicans on both ends of Pennsylvania Avenue should be able to agree on...
...Whether you're a Keynesian or a supply sider, that's a formula for chilling economic activity, not heating things up...
...It's not bold, but saddled as they are with the lockbox, it's probably the best they can do for the moment...
...Democrats are poised to make any tampering with the surplus their major theme against Republicans in the 2002 election...
...The White House says that passing an energy bill and trade promotion authority would provide stimulus...
...That would raise a serious credibility issue...
...On another level, though, cracking open the lockbox, as Domenici has advocated, makes all the sense in the world...
...His new agenda would call for advancing the just-enacted rate reductions on individual income so they'd take full effect now rather than in 2006, cutting the capital gains tax rate to 15 percent from 20 percent and eliminating all holding requirements, immediately killing the inheritance tax, providing business tax relief of some kind, and so on...
...The Bush tax cut ate up a large chunk of the non-Social Security surplus, and the loss of revenue due to the weak economy accounted for the rest...
...I'd like us to just take a look-see to make sure the stimulus package that we now are implementing works," Bush said...
...This would allow Bush to fund the military adequately to make up for the mindless downgrading of defense in the Clinton years...
...He'd also insist, correctly, that this would benefit Social Security in the long run...
...We'll make it totally off-limits by putting surplus payroll taxes in a lockbox that can't be touched...
...Gore attacked him anyway, but that's another story...
...Congressional Republicans want to go further, cutting the capital gains rate, making the Bush tax cuts passed earlier this year permanent, extending the ban on taxing the Internet, enacting tort reform...
...For today's purposes, the lockbox—which doesn't really exist except as a bookkeeping metaphor for insulating Social Security—is all but sacrosanct...
...But there's more they can do besides kneeling in the Oval Office and praying that predictions of an economic resurgence beginning late this year or early in 2002 turn out to be accurate...
...So, Bush would declare that the nation's overriding priority is saving the economy...
...In last year's election, Bush endorsed the idea as well, if only to keep Gore from bashing him on Social Security...
Vol. 7 • September 2001 • No. 1
