Covering the Front and Back Pages of the Newspaper
March 26, 2003
POLITICS: Tax Cut Cuts
Larry Kudlow thinks there's no reason for tax-cutters to panic over the Senate's vote slashing the "size" of the President's tax cut package to $350 billion from $725 billion. This is all inside baseball type stuff, as he points out; there's still plenty of time for the conference report to decide the ultimate fate of the tax cuts. A few thoughts:
+This should qualify for Kaus' competition for sneaking a story out in the fog of war - the Dems get to vote for higher taxes while nobody's looking.
+The vote was on the overall size of the package as measured by static revenue estimates -- but that tells us very little about what the final package will look like. To my mind, the most important parts are that the package should accelerate whatever cuts are going through, and should cut dividend taxes to give the stock market a shot in the arm.
+The "static" revenue estimates are, of course, fraudulent, and everyone knows it, not least because they assume that nobody changes behavior in response to tax cuts (which is idiotic) but also because they rest on predictions of the unpredictable several years down the line. Unfortunately, that's the only way Washington measures these things (what ever happened to the idea that a GOP Congress would change the scoring system? That's far more important and far-reaching than most of the other things Congress does).
+This is partly a response to the House increasing the size of Bush's proposal, which is also a negotiating position.
+It'd obviously be very good to totally eliminate the dividend tax, since a tax that's repealed is much harder to restore than it is to raise a tax that's been cut. But Bush was originally expected to propose just cutting it in half. Which gets to the strategic issue: yet again, Bush has shifted the terms of debate to whether he gets the whole tax cut package or just another big tax cut. Once again, the Democrats are reduced to wasting their fire on the boldest initiatives, and have to concede most of the ground Bush really wants.
But, of course, we know Bush isn't that smart, right?