COLUMN RIGHT : Feeble Nibbles at the Edges of Tax Reform : President Bush gave us a piddling laundry list of petty proposals.

Having hyped the State of the Union address for weeks as “the defining moment of the Bush presidency” and the answer to recession, the Bush Administration gave us a monumental dud.

The failure wasn’t a matter of style. With a script in his hand and a text worked over by Reagan speech writer Peggy Noonan, President Bush was at least able to sound “presidential” and avoid the look of confusion, even disintegration, that plagued him in Japan and New Hampshire. We were treated to a reprise of great Republican hits of the past, even the “extremism” line from Barry Goldwater’s 1964 GOP acceptance speech. The big nostalgia note, of course, came from Bush’s one certified triumph, Desert Storm.

Cut through the hype and the rhetoric, however, and what of substance remains? Almost nothing. What we have is a piddling laundry list of petty proposals, most of which have been trotted out before, and which will make no dent on the recession nor help our serious problem of long-term economic stagnation.

To get out of the recession, the American economy needs, above all, massive tax cuts--tax cuts for saving and investment and on middle-class income. No school of economic thought ever proposed a tax increase during a recession. Yet that is what we have suffered: States and localities have increased taxes to bolster declining revenues, and George Bush, as we know all too well, betrayed his solemn “Read my lips!” pledge, when he agreed to a massive $100-billion federal tax increase.

Bush insists on sticking by his disastrous budget agreement with Congress that essentially prohibits large-scale cuts in tax revenues. Hence, no much-needed cut in income tax rates for the middle class; no call for adoption of the imaginative Moynihan plan to slash Social Security tax rates.

The only substantial tax cut proposed by Bush is reducing the capital gains tax by nearly half, because his economists have persuaded him that the cut will be quickly made up by an increase in the taking of capital gains, so that total federal revenue will remain the same. Only by getting out of this “supply-side” trap, only by being willing to cut government revenues as well as rates, can we give the American people their much-needed tax relief.

Instead, there is only a feeble whittling away at the edges of tax reform. A few tiny steps are taken to begin to repair catastrophic damage to the housing market from the bipartisan Tax “Reform” Act of 1986. Allowing deduction of interest paid on student loans is fine but picayune; why can’t we, as before 1986, deduct all interest payments, or all uninsured medical expenses? Raising personal exemptions on income taxes by $500 a child is a tiny step in the right direction, but why doesn’t the President suggest, at the very least, restoring to their intended value personal exemptions, which for many years have been eroded by continuing inflation?

Neither is there any attempt by Bush to reduce the oppressive burden of government spending on the economy. The President hails the fact that communism has died, and that therefore the American taxpayer deserves a break. But where is that break? And if the Soviet empire no longer exists, why propose only a piddling $10-billion-a-year cut in military spending? Why continue the military budget, the foreign aid, the armies and bases abroad, as if we were still saddled with the war against communism?

Hard times call for imaginative leadership. They call, in particular, for drastic cuts in taxes on the middle class, for massive deregulation of business and for a slashing of unproductive government spending. Instead, the President gives us only a look of determination and a replay of Peggy Noonan’s Golden Oldies.