Halfway through his address to Congress last night, George W. Bush declared, “Now we come to a fork in the road.” Now? Bush had spent 25 minutes outlining dozens of budget decisions. All of them were forks in the road, but Bush didn’t want them seen that way. He wanted to reduce the debate to this fork: “bigger government” versus letting “the American people spend their own money.” In their rebuttal, Senate Democratic Leader Tom Daschle and House Democratic Leader Dick Gephardt fell back on the old Democratic strategy of pitting tax cuts against Medicare, Social Security, and paying down the national debt. But that message is losing force. As the budget surplus grows, Bush is adapting shrewdly to the new environment. Democrats aren’t.
In principle, the Democratic strategy makes sense. The morning before Bush’s speech, the Washington Post released a poll showing that when asked which “should be the top priority for any surplus money”—tax cuts, debt reduction, strengthening Social Security, or spending more on education and health care—only 22 percent of adults chose tax cuts. If you have to choose, tax cuts lose. But what if you don’t? What if there’s enough money to cover all four options? The dilemma—and with it the public’s ambivalence about a tax cut—dissolves. The ballooning surplus projections make this argument possible. And last night, Bush delivered that argument flawlessly.
In the opening 20 minutes, Bush systematically bought off each of the programs that had been cast by Democrats as alternatives to his tax cut. “We increase spending next year for Social Security and Medicare and other entitlement programs by $81 billion. We have increased spending for discretionary programs by a very responsible 4 percent, above the rate of inflation,” he boasted. Like a U.S. bomber taking out Iraqi radar sites, Bush neutralized his political targets by dropping bags of money on them, tripling funds for reading, doubling funds for health research, and promising money for “a new prescription drug benefit for low-income seniors.” He even pledged “to pay down $2 trillion in debt during the next 10 years”—”all the debt that is available to retire”—and set aside a $1 trillion “contingency fund for emergencies or additional spending needs.”
Three times, Bush recited this list, circling back over his targets to make sure they could no longer be portrayed by Democrats as unfunded needs. “We have increased our budget at a responsible 4 percent. We have funded our priorities. We paid down all the available debt. We have prepared for contingencies. And we still have money left over,” he said. After repeating the “money left over” line for the third time—satisfied that he had identified and neutralized all the Democrats’ weapons—Bush swung his plane low for the kill. “Now we come to a fork in the road,” he concluded. “We have two choices. Even though we have already met our needs, we could spend the money on more and bigger government. … The other choice is to let the American people spend their own money. … I hope you’ll join me in standing firmly on the side of the people.” In short, Bush was telling Democrats: You say needs are more important than tax cuts. Fine. I’ve paid for all the needs. Now cough up the tax cut.
Yes, Bush is lucky that the surplus has grown. But he has used that growth wisely. Instead of padding his tax cut, he has held it constant, allowing the steady flow of additional money into the surplus to fill up all the other accounts Democrats had accused him of neglecting. When Bush proposed the tax cut in December 1999 in an environment of lower surplus projections, he dismissed the question of cost, saying, “The question is not how much government can afford to give to taxpayers. The question is how much the taxpayers can afford to give to government.” That position, while helpful in the Republican primaries, would have failed Bush in a contest against the Democrats’ emphasis on entitlement programs and debt payment. So Bush abandoned it. He accepted the premise that the taxpayer should get only what was “left over” after those programs and debts were paid off—because he saw that they would be paid off and that the leftovers would be enough to fund the tax cut.
You’d think conservatives would take offense at this capitulation. Instead, they cheered while Bush promised to spend billions more on one program after another. In part, they’re just happy to have a Republican president. But Bush has played them brilliantly. When surplus projections were low, his tax cut looked huge, and Bush refused to shrink it. Now that it looks smaller in comparison to the surplus, conservatives can’t call him a coward for refusing to increase it. While boasting to liberals about spending more on popular programs, Bush keeps conservatives focused on the difference between his spending hikes and the larger hikes Democrats would have sought. “My budget is going to say loud and clear that the rate of growth of the budget—for example, from last year—was excessive,” he pledged at his Feb. 22 press conference. The tough pose—”loud and clear”—distracted conservatives from the words of surrender: “rate of growth.”
Bush’s “fork in the road” passage, while disarming the left, blinded the right. All the decisions that preceded that phrase—payoffs to every large, politically popular program championed by Democrats—disappeared from view. The debate—the fork—was stripped down to tax cuts versus “bigger government.” Bigger, that is, than the more-for-education, more-for-health-insurance, more-for-entitlements government Bush had already endorsed. Essentially, he had reduced the choice to a no-brainer. The fork, greased with the flavor of conservative red meat (“The surplus is not the government’s money; the surplus is the people’s money!”), was empty. Republicans leapt to their feet and gobbled it up.
On the other hand, you’d think Daschle and Gephardt, realizing that the choice was a no-brainer, would meet Bush in the middle. He, preferring tax cuts to spending hikes, had found room in the swollen surplus for both. They, preferring spending hikes to tax cuts, could do the same. But the ancient law of political spite—whatever my opponent is for, I’m against—overwhelmed their judgment. Not content to call Bush’s tax cut unfair—an argument they could have won, had they confined themselves to it—they insisted that the tax cut was too big as well.
A year ago, when Bush’s tax cut was, in Daschle’s words, “three times the magnitude of the non-Social Security surplus,” this fight made sense. But as surplus projections rose, Democrats had to stretch numbers and credulity to keep up. First they added interest costs to the tax cut. Then they raised the upper-end projection of lost revenue. When they could no longer claim that Bush was busting the budget, they accused him of using up “virtually the entire surplus.” When the surplus got so big that Al Gore proposed to double his own tax cut and Bill Clinton offered to sign the GOP’s bill cutting the marriage-tax penalty, Daschle invented a new number combining Bush’s tax cut with his Social Security privatization plan and tax cuts proposed by Republicans in Congress. “The running total now on the Republican side,” said Daschle, “is $3.4 trillion.” As the surplus surged higher, Daschle pushed additional “priorities” in front of tax cuts: faster debt payment and a $500 billion “fund for America’s future.” The tax cut is full of “hidden costs” making it “far more expensive than the $1.6 trillion [Bush] claimed,” he argued last night. “It will consume nearly all of the available surplus, at the expense of … critical priorities.”
The problem with this argument—other than the absurdity of constantly moving the goal posts—is that by definition, not everything can be a “priority.” A year ago, “priorities” meant Social Security and Medicare. Then it included debt payment. Then it included a contingency fund. Now that Bush says he can pay for all these things, Democrats are coming up with new “priorities”—sewers, roads, mass transit, air travel infrastructure, the war on drugs, “neighborhood safety,” etc. Their efforts to keep track of an ever-growing list of “priorities,” as well as the advanced math necessary to keep Bush’s tax cut ahead of the surplus, are becoming comic. Explaining a series of subtractions on Meet the Press last weekend, Sen. John Kerry, D-Mass, accidentally found that Bush was $1 trillion in the black. The senator insisted he had missed $1 trillion somewhere.
The other objections offered by Daschle and Gephardt last night were equally lame. They said rosy surplus projections can’t be trusted—but Bush made the same argument back when Clinton, Daschle, and Gephardt were touting rosy surplus projections, and nobody heeded him. They called Bush’s tax cuts as reckless as Reagan’s, as though Reagan had enjoyed the massive surplus projections Bush faces today. They compared the government’s predicament to that of a taxpayer—”Imagine you hadn’t saved for your retirement, when you owed money on your credit cards and you couldn’t afford health insurance”—while Bush skipped the analogy and appealed directly to the taxpayer’s predicament. Meanwhile, the Democrats omitted their best argument: installing a “trigger” that would limit or postpone tax cuts if surplus projections don’t pan out. The trigger idea helps Democrats by reviving the debate over whether tax cuts are more important than entitlement programs.
The Post, citing its own poll, says Bush “will have a difficult time achieving passage” of his tax cut. “Only 22 percent favored a tax cut as the top priority,” the paper observes. But that’s eight points better for Bush than the same poll showed in September. Last summer, 53 percent of adults thought Bush couldn’t balance the budget while cutting taxes. Now only 42 percent think he can’t cut taxes, balance the budget, “and provide enough money for programs such as Social Security, education and health care.” The numbers are moving in his direction. They have been all along.