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Jewish World Review Jan. 24, 2003 / 21 Shevat, 5763

Dick Morris

Dick Morris
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Consumer Reports

Rebirth of the balanced budget Republican | It's obvious to any observer of our national economy that the Federal Reserve has gone about as far as it can in cutting interest rates, unless it wishes to mimic Elton John's song "Too Low for Zero." This inability of monetary policy to shock us out of our economic sluggishness leaves fiscal policy as the only real alternative - hence the new Bush tax cut.

The only problem is that, while the public believes in monetary action, it is distinctly non-Keynesian when it comes to running budget deficits.

The manipulation of fiscal policy to accelerate or dampen the economy has never enjoyed a favorable public constituency. The right believes in cutting taxes and the left likes to raise them, but neither agenda has much to do with revving up or slowing down the economy. To the great mass of voters, tax cuts are much less popular than shrinking the deficit or reducing spending.

In light of this, disjuncture between what is needed economically and what is popular politically opens up the Bush administration to the rebirth of the balanced budget Republican on its left flank.

The likes of GOP bulls like Sens. Pete Domenici (R-N.M.) and Ted Stevens (R-Alaska) may be tempted to rediscover the balanced budget rhetoric of their political past while moderates such as Olympia Snowe (R-Maine), Susan Collins (R-Maine), George Voinovich (R-Ohio), Norm Coleman (R-Minn.) and Lincoln Chafee (when we last checked a Republican from Rhode Island) move away from the tax cut dogma of the right.

Historically, the Republican center has opposed tax cuts when larger deficits would be the result. Only the shocks of Reagan's victory in 1980 and Bush's in 2000 induced moderate Republican senators to abandon their historic fiscal orthodoxy and embrace broad tax reductions.

The White House's recent high-handed treatment of Sen. Trent Lott (R-Miss.) and signs of executive arrogance in the weeks since might well catalyze a new Republican center that blocks, or at least modifies, tax reduction.

Second terms have traditionally been the downfall of popular presidents because their reelection victories tend to encourage overreaching and arrogance. FDR's court packing of 1937, LBJ's Vietnam escalation in 1965, Nixon's Watergate cover-up of 1973, and Clinton's perjured testimony of 1997 are all recent reminders.

George W. Bush's unique triumph in the midterm elections of 2002, so unprecedented that there are no recent historical examples to explore, might kindle the same kind of omnipotence and, perhaps, trigger a similar backlash.

But George Bush needs a tax cut. When the smoke clears after the war-to-come in Iraq, a sluggish economy could trigger a sickening repetition of his father's fate unless there is adequate stimulant to move the economic numbers. But with the ranks of his own party thinning in support of his cuts, his chances of reaching the 60 votes he needs to pass the Senate seem limited.

The message for Bush is that he may find that he has to compromise on the mix of his cuts, although not on the amount of the aggregate stimulus. The Democratic Party opposes tax cuts but it cannot say so publicly. Thus, it is forced to support the idea of lowering the tax burden but using class warfare rhetoric to dispute the allocation of the relief. The key to crossing up the Democrats is to insist on the amount, but compromise with them on the specific mixture of which cuts and who benefits.

Bush's effort to make stock dividends tax-exempt appeals to a sense of justice and fairness. He is right in identifying small investors as the modern equivalent of the soccer moms who were the swing voters of the 1990s. But he should settle for a phase in of the exemption and use the remaining revenue to sprinkle goodies in the form of tax reductions.

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JWR contributor Dick Morris is the author of, among others, "Power Plays: Top 20 Winning and Losing Strategies of History's Great Political Leaders" Comment by clicking here.


01/22/03: Next to Bubba, Dubya's got it good
01/16/03: End racism in affirmative action
01/13/03: The new swing voter
01/10/03: Political e-mailing comes of age
01/07/03: In Dem race: Home field no advantage
12/31/02: Hey, Hillary: Want to appear like a stateswomyn? Stay silent
12/19/02: Kerry in the lead
12/19/02: Lieberman the frontrunner
12/17/02: In defense of Lott
12/02/02: An issue for Bush: Drugs
11/27/02: Women gone wobbly?
11/25/02: The U.N. over a barrel
11/15/02: Gore's suicide
11/15/02 One-party control is an illusion
11/13/02 The House of Extremes
11/08/02 I have egg on my face
11/01/02 Is Bush losing control over events?
10/25/02What is causing Bush's free fall?
10/25/02: Anybody sense a trend?
10/23/02: A deadline for Iraq
10/18/02: Only sure bet of 2002 elections is voter angst
10/16/02: Endangered incumbents
10/11/02: Why multilateralism doesn't work
10/09/02: Hey, Dems: Believe NYTimes polling at your own risk
10/03/02: Dem suicide: Let's count the ways
09/30/02: The Dems just can't stop themselves
09/26/02: The perils of polling
09/19/02: W. boxed in the U.N.
09/19/02: Welfare reform: Keep on keeping on
09/12/02: Are Dems insane on Iraq?
09/09/02: Twin shadows of Election '02
09/05/02: GOP should triangulate
08/28/02: Trust the military
08/22/02: It's not the economy, stupid
08/09/02: As America unites, Gore goes divisive
08/01/02: Bush must focus on big picture
07/23/02: Election 2002: Advantage Dems
07/19/02: Rudy for SEC tough cop
07/17/02: The investor strike
07/15/02: Door open for drug testing students --- go for it, GOP!
07/12/02: Dubya looking out for No. 1?
07/03/02: The DNA war for Bush's soul
06/21/02: Why are conservatives winning?
06/19/02: Learning to love the feds
06/14/02: Hey, journalists and Dems: Dubya is doing just fine
06/12/02: It's terrorism, stupid!
06/10/02: Sanctions are a potent weapon
06/04/02: Al Qaeda's more dangerous new front
05/31/02: Why '04 looks tough for liberal Dems
05/24/02: Democratic self-destruction
05/22/02: The Clinton failures
05/15/02: Pataki positioned to win
05/08/02: A wakeup-call for American Jewry
05/03/02: Give Bush back his focus
05/01/02: Immigration fault li(n)es
04/25/02: It's the war, stupid
04/17/02: Bush goes small bore
04/12/02: Bush must be a gentle partisan
04/10/02: In defense of polling
04/08/02: Focus on Iraq, not the Palestinians
04/01/02: Only Internet will bring real campaign finance reform
03/27/02: Where W's drawn a line in the sand
03/22/02: Enron scandal will not trigger a wave of economic populism
03/20/02: Term-limited --- by war
03/15/02: Europe doesn't have a clue
03/11/02: Bush popularity = GOP win?
03/01/02: Will America be forced to chase its tail in its war on terrorism?
02/27/02: The Arafat/Saddam equilibrium must be destroyed
02/21/02: Campaign finance reform won't hurt GOPers
02/13/02: Dodd scurries for cover
02/11/02: U.S. 'unilateralism'? The Europeans don't have a case
02/06/02: WAR: What women want
02/01/02: They all talk in the end
01/30/01: The odd couple: Chris Dodd and Arthur Andersen
01/22/01: His father's son? Bush better get an 'Act II' fast!
01/18/01: Dubya & the 'vision thing'
01/14/01: The Rumsfeld Doctrine 01/03/01: A President Gore would have been a disaster
01/03/02: Clinton's priority: Political correctness over fighting terror
12/27/01: Terror network grew out of Clinton's inaction, despite warnings
12/24/01: Call 'em back, George
12/18/01: What Bush did right
12/13/01: Libs worry too much
12/11/01: "Open Sesame": Feinstein's proposed bill allows 100,000 non-immigrant students from anti-American countries to our shores
12/07/01: The non-partisan president
12/05/01: Both parties are phony on stimulus debate
11/29/01: When terrorists can enter legally, it's time to change the laws
11/21/01: Go for the jugular!
11/16/01: You are all incumbents
11/14/01: Clinton's failure to mobilize America to confront foreign terror after the 1993 attack led directly to 9-11 disaster
11/12/01: To the generals: Don't worry about losing support
11/08/01: The death of the white liberal
11/07/01: Our leaders are being transformed in a way unprecedented in post-World War II history

© 2002, Dick Morris