Right Direction on Taxes

One thing politicians count on is that Americans want their taxes cut, particularly around April 15. Yet according to a new Associated Press poll, more than six in 10 Americans say that with the country paying for war and confronting huge budget shortfalls, taxes should be left alone. Even a majority of Republicans in the poll opposed new tax cuts now.

President Bush, who is delivering a Rose Garden speech today that will repeat his calls for more than $700 billion in new cuts, may not be listening. But Congress is starting to get the message. On Friday, Senate moderates George Voinovich (R-Ohio) and Olympia J. Snowe (R-Maine) took advantage of the GOP’s paper-thin Senate majority and persuaded Senate Finance Committee Chairman Charles E. Grassley (R-Iowa) and Majority Leader Bill Frist (R-Tenn.) to compromise on the size of new tax cuts.

To the fury of House leaders, Frist agreed to hold the line at $350 billion rather than the $550 billion that the House would have settled for. If the $350-billion figure survives House-Senate negotiations, out goes Bush’s plan to eliminate taxes on stock dividends.

Despite his wartime popularity, Bush is demonstrating that he can’t ram every one of his agendas through Congress, even a Republican Congress. Bush has presented the cuts as resuscitation for a dormant economy, but most of his proposals are long-term tax cuts primarily benefiting the wealthy. Mainstream economists say they would offer little or no short-term economic stimulation.

White House advisor Karl Rove, who regularly meets with influential anti-tax activist Grover Norquist, knows that slashing social programs sits well with ideologues. Defense and other security spending is inviolate, so Bush’s calls for an additional $725 billion in cuts would mean eviscerating social programs, pushing backward toward a pre-New Deal America.

With Bush’s $1.3-trillion tax cut of 2001 still going into effect, the annual federal deficit poised to hit $400 billion this year and states including California facing their severest budget cuts in decades, it doesn’t take a doctorate in economics to see the consequences of more tax cuts. Since February, the Treasury Department has been using accounting tricks to keep spending below the $6.4-trillion statutory debt threshold, until Congress can get around to raising it again -- an embarrassing move that it’s in no hurry to do. Even the $350-billion compromise should at this point be tabled.

The AP poll did show a majority thinking their own taxes were too high. But many of the people who said this also opposed new tax cuts, for the good of the nation. The same sense of caution should start sinking in at the White House.