Posted on 04/22/2003 7:24:04 AM PDT by sjersey
The Wall Street Journal got it wrong on Monday when a page-one story suggested that Treasury Secretary John Snow is ready to compromise on President Bush's tax-cut plan. A senior advisor for Bush staunchly countered this claim, telling me that "the president is going for as big a tax cut as he can get with 100% of the key policy elements." The advisor added that the Bush team is "100% behind John Snow." As they should be. The president is likely to get a large chunk of his big-bang tax reform because Snow has explained it so eloquently, and unerringly, in numerous public and media forums this year. It's baffling how the Journal got his message so wrong.
According to a senior Treasury official who sat in on the Journal's interview with Snow, the Treasury secretary responded to a hypothetical case where a 50% dividend exclusion would be more amenable to a $550 billion tax-cut package — rather than the administration's original proposal of $725 billion. But Snow characterized this as only "one possibility" to reporter Bob Davis.
On another contentious point, it was Davis — not Snow — who suggested a delay in cutting the top individual marginal tax rate from 38.6% to 35% while accelerating the other income-tax rates. In fact, according to my Treasury source, Snow at least twice told Davis, "I don't like that idea."
When Davis noted Snow's view that a top rate cut would benefit small-business owners, he quoted Snow saying, "This [top-rate] cut has so much oomph to it, in terms of immediate impact to the economy." But when Davis wrote that Snow "suggested the top rate could still be phased in" at a later date, he did not support the statement by directly quoting Snow.
All this controversy stems from a recent deal by Senate Republicans to limit the Bush tax-cut proposal to only $350 billion — roughly half the original. This devil's pact — struck with senators Olympia Snowe and George Voinovich — was agreed to by Majority Leader Bill Frist, Budget chairman Don Nickles, and Finance Committee head Chuck Grassley. Considerable friction has since developed between Republicans in the House and Senate.
On ABC's This Week, Grassley said that while he would be willing to vote for a much higher tax-cut, he made the deal with Snowe and Voinovich (dubbed "Franco Republicans" in hard-hitting ads from Club for Growth) in order to secure the necessary votes for a budget resolution that sets spending and revenue targets. Importantly, such a resolution requires only a simple one-vote majority to pass a tax cut, not a 60-vote majority.
More, the new $350 billion tax-cut limit applies only to bills coming out of the Senate Finance Committee and voted on the Senate floor. The Grassley deal will not apply to a House-Senate conference for the final tax cut where the tax number could be as high as $550 billion, an amount supported by the president.
The president's jobs-and-growth proposal is not the deficit-busting item that Beltway pundits and Democrats claim it to be. The Congressional Budget Office estimates that federal tax revenues will be a mind-boggling $29.8 trillion over the next eleven years. Hence, the proposed tax cut will come in at a mere 2 1/2 percent of federal revenues during this period. The CBO also projects a whopping $155 trillion increase in gross domestic product over this span, making the revenue impact a mere one-half of one percent of estimated GDP.
Numerous forecasts suggest that the Bush plan will add a full 1% to GDP growth over each of the next five years, creating 1.4 million new jobs annually during this period. It is also likely that the combination of lower taxes and higher investment returns — including incentives for small businesses to invest — will generate sufficient economic growth to reduce the estimated cost of the package by at least one-third.
Class-warrior Democrats say the plan will only benefit "rich people," but the real winners will be regular workers. A greater supply of capital investment will raise productivity, leading to higher real worker wages, modernized equipment, and more on-the-job training. Remember, two of three voters today own stocks, and one of every two families are shareholders.
Congress will reduce the size of the pending tax package to roughly two-thirds of the original, so the White House will ultimately settle for a 50% dividend tax exclusion, with the rest phased in over time. But President Bush has said again and again, "I've learned never to negotiate with myself, because then I will lose." Look for Bush and his strong Treasury man to stay on message and keep up the drum-beat for their post-war tax-cut plan. In the end they will get more than Beltway pundits believe, thereby benefiting the economy and the global war on terrorism enormously.
deport...counter to the New York Times article, if you are interested. The one administration official quoted in that NYT article was misquoted by the WSJ.
Agree on booting Davis....get it right WSJ editors, do your job.
For myself, I like the Journal, far and away the most objective and generally conservative paper with intelligence to spare.
As to Al Hunt, I either ignore his columns, which are infrequent, not every issue, or else I read 'em for amusement at how deluded and idiotic the leftists can be.
Leftists don't see things the way you and I do. Sad isn't it?
Dorothy Rabinowitz is worth the entire WSJ susbscription cost. She is a treasure, IMO.
You will note that Rumsfeld and the DoD always have their own transcripts out when any reporter gets an interview. This indicates to me that the interviews are taped by DoD.
Looks like Snow took the precaution of having a witness. Excellent! Now the WSJ reporter and the NYT lackey's are caught.
And we are dead on right about Al Hunt.
The inside story: True-believing House Republicans and a handful of Senate coreligionists are furious at an even smaller handful of Senate Republicans who have for now blocked the Bush proposal, but they exhibit more fury over what they regard as the duplicitous behavior of their stumbling new majority leader, Bill Frist of Tennessee.
The outside story: One of the conservative movement's death squads has announced a six-figure TV ad campaign targeting the home states of the two GOP senators who are most responsible for the sagging fortunes of Bush's latest tax cut proposal. The White House has not intervened to stop the attacks.
As ever, I'll take the outside story first because it involves actions and money instead of political babble.
The commercials are being paid for by the conservative Club for Growth, an economics-fixated political group that is already helping fuel a primary campaign next year against one GOP moderate (Arlen Specter of Pennsylvania) and is fairly close to fueling another against a more famous maverick (John McCain of Arizona). Ironically, neither has done anything to contribute to the aforementioned sagging fortunes of Bush's latest tax cut proposal.
The current campaign targets Olympia Snowe of Maine and George Voinovich of Ohio, who are guilty as charged. The ads take the crude route of accusing the two of disloyalty to a wartime president, making the most odious current analogy of them all for true believers -- to the French.
Their sin against orthodoxy was their refusal to back a tax cut worth more than $350 billion (less than half the Bush request) in goodies the country can't afford in the just-concluded budget resolution fiasco on Capitol Hill. There is still time and there are still numerous parliamentary tricks to reverse what they did, but for now Snowe and Voinovich have thrown a large monkey wrench into the Bush proposal's gears. The real reason for the conservative fury is that if their positions hold, the heart of the president's program -- the repeal of income taxes on nearly all corporate stock dividends -- is a goner.
Making dividends tax-free to individuals is not a kitchen table issue; it is a stock market player's issue. In context -- hemorrhaging government finances, still-weak job market, sluggish economy, anemic business investment in capital equipment -- it is at best inconsequential and at worst a serious threat to responsible fiscal and social policy.
In fact, in his recent, modest activity in relation to the poor economy, Bush has not even referred to it. Instead, his rhetoric uses cover like ''jobs package'' or ''growth package,'' ignoring the absence of evidence that his program would affect either. Above all, he shouts to the rafters that size matters, claiming that Congress must give him a ''package'' of at least $550 billion.
Behind this jabber the GOP feud rages. The House leadership, which gave rubber stamp approval for what Bush wanted in its version of the budget resolution, is furious at Frist for caving in to Charles Grassley, chairman of the Senate Finance Committee, and furious at Grassley for caving in to Voinovich and Snowe.
Speaker Dennis Hastert and the majority leader, Tom DeLay, have a point. Faced with an inability to pass a resolution backing a tax cut larger than $350 billion, Grassley agreed to commit to holding that position when the real thing comes down the legislative pike later this year, and Frist went along.
The problem is that Frist failed to inform Hastert and DeLay of the deal and cut his own elected deputy, the outspoken conservative Rick Santorum of Pennsylvania, out of the discussions. Naughty, naughty.
Frist claims regrets and pledges to work for a tax cut more to Bush's liking, but the fact remains that if Voinovich and Snowe stick to their point that the country can't afford more, the Bush plan can't pass.
Fair enough, but the WSJ has a huge counterweight with, Bartley, Henninger, Gigot, Rabinowicz, et al. Any garbage put out or approved by Hunt is far outclassed by the rest.
Agreed. Wave of the future for a lot of journalism, once the embeds get home and tell it like it really is.
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