| | Gao, great article by Sowell! In the WSJ today another good one:
The Daschle Economy
Someone once quipped that Hillary Rodham Clinton had the courage of her husband's convictions. It now looks like she has the courage of Tom Daschle's too. The two Democratic Senators both admit to loathing the Bush tax cuts that passed last year, but so far only Mrs. Clinton has been candid enough to propose their repeal.
Mr. Daschle's reluctance on repeal was the real news in his much advertised economic speech last Friday. The Senate Majority Leader who would like to be President blamed the Bush tax cuts as the cause of budget deficits, recession, high interest rates and every other ill short of tooth decay. But apparently the tax cuts are not so awful that he isn't willing to live with them, at least until he's the one sitting in the White House after 2004. Where's Hillary when you really need her?
That's only one of the reasons it's hard to take Mr. Daschle's enlightening lecture too seriously as economics. His speech can only be understood as the political strategy for expanding his precarious one-seat Senate majority in this November's elections. With a popular war President as his opposition, Mr. Daschle has to change the subject, which means trying to pin the recession on Republican tax policy.
Daschle's conscience
This is harder than it sounds. Mr. Daschle hesitates to call for an outright tax-cut repeal because no fewer than 12 of his fellow Senate Democrats voted for the Bush tax cut. One of them was Mr. Daschle's own South Dakota protege, freshman Senator Tim Johnson. With Mr. Johnson running for re-election himself this November against a popular GOP challenger, it would be a tad awkward to have a Democratic campaign based on repudiating that tax vote.
There's also the inconvenient matter of economic timing. The recession seems to have officially started last March, well before the tax cuts passed in June. And the plunge in stocks and downturn in manufacturing started well before that in 2000, when Bill Clinton was still President.
For that matter, most of the Bush tax cuts haven't even become law yet; they're phased in over several years, with the largest cuts coming after 2004. As readers of these columns know, that delay was one of our main caveats about the Bush tax proposal. We feared it wouldn't boost the economy quickly enough.
Instead, the part of the tax cut that has had the most immediate budget impact was the tax rebate that Democrats insisted on as a price of their support. That rebate, from $300 to $600, was distributed last summer and autumn to much political fanfare but no discernable economic effect. The rebate took about $40 billion out of the projected budget surplus last year. If Mr. Daschle is as worried as he says he is by the return of budget deficits, he could always propose that Americans send their rebate checks back. But somehow that didn't make it into the Daschlenomics speech either.
The Majority Leader's other big problem is his own party's spending urge. With former Treasury Secretary Bob Rubin whispering in his ear, Mr. Daschle now argues for "a return to fiscal responsibility." Yet at the same time he's presiding over a Senate majority that berates Mr. Bush for refusing to spend more on just about everything.
In December alone, Democrats pounded Mr. Bush for not spending enough on education, for not endorsing the most expensive farm subsidy bill in world history ($170 billion), for blocking another $20 billion for Senator Robert Byrd's version of "homeland defense" (think West Virginia) and for not spending enough on New York City.
We'd give Mr. Daschle credit for sincerity if he blew the whistle on even one of these items. But instead his speech raised the ante with a slew of his own new spending proposals: a new Jobs Creation Tax Credit, "a renewed commitment to training and lifelong learning," more cash for "doubling civilian R&D funding" and "making broadband Internet access as universal as telephone service," to mention only a few. Whatever the merits of each of these, taken together they hardly add up to "fiscal discipline."
We're nonetheless pleased Mr. Daschle made his speech. It took a step toward clarifying for voters that the major fault line between Republicans and Democrats continues to be taxes, in particular as a proxy for the size of government. That's a good debate to have come November.
So why go only halfway? If Mr. Daschle really believes the Bush tax cuts were a disaster, we'd encourage him to unleash his Inner Hillary and call for their complete repeal.
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