Senate Republicans Have ‘Explaining To Do’
By Brian Yates (04/27/03)
Lately Senate Republicans have been acting like a minority party rather than the Senate majority. Recently a group of Republican senators got together to agree to limit the Bush tax-cut proposal to $350 billion from its original $725 billion. Senators Olympia Snowe of Maine and George Voinovich of Ohio were unsurprising members of this group, but it was the GOP leadership who really shocked and angered the masses. The “cut-the-cut” deal was agreed to by Majority Leader Bill Frist, Charles Grassley of the Senate Finance Committee, and – the biggest shock of the group – Sen. Don Nickles. Nickles is disturbing because he has long been a conservative stalwart on Capitol Hill.
Why did the President bother to work so hard last year campaigning for a Republican majority? The entire leadership has just rolled over on the tax cut issue and given the Democrats what they wanted. Liberal and moderate Republicans are being allowed to run the Senate, and the blame has to fall on the apparent cowardice of the body’s leadership. Sen. Mitch McConnell has been recovering from surgery, and therefore unable to use his position as party Whip to whip his people into line, but where has Bill Frist been?
Voinovich and Snowe have both said that they will except no tax cut larger than $350 billion. Several other Senate Republicans such as John McCain and Rhode Island’s Lincoln Chafee have said they oppose all tax cuts. The president has agreed to a bit of a compromise and said he will accept a slightly smaller tax cut of $550 billion. This should be a situation in which Bill Frist would at least attempt to come up with some sort of compromise between the majority of Republicans in the Senate and the few dissident members of the party. That is what leaders do. Instead Frist and his team have not only rolled over for these so-called deficit hawks; they’ve joined them!
The key element that all these people are failing to understand would be rectified by taking one simple economics course. We currently have a deficit in the U.S. because we have been at war. This will obviously do two things: increase spending in areas of defense, and secondly, it will affect the revenues coming into the Treasury. A recession and negative growth means less revenue. So for obvious reasons, we have a deficit. But, at the same time, how do you produce more revenue in order to balance the budget? You cuts taxes to stimulate economic growth which produces more jobs, which means more taxpayers, which means – even though the amount paid in taxes per person is less – the total revenues coming into the Treasury rises drastically.
The Congressional Budget Office has estimated federal tax revenues over the next 11 years to be 29.8 trillion dollars. Taking this estimate, the Bush tax cut will equate to a tiny 2.5 percent of federal revenues during this period. The CBO has also estimated a $155 trillion increase in the gross domestic product over this same 11-year period. Do the math folks, the revenue impact will be a microscopic 0.5 percent of the estimated GDP. One might think that since it is the Congressional Budget Office coming up with these estimates, Senate Republicans might actually take a look at the numbers. But one would think wrong.
According to economist Lawrence Kudlow, the Bush plan will add at least one percent to GDP growth over each of the next five years and create 1.4 million jobs annually over this same period. Mr. Kudlow also states – and this is a biggie – “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.” Grab a calculator and do the math…one-third of $550 billion is $183.33 billion. Which means the total cost of the package will be $366.67 billion. Maybe Majority Leader Frist should offer a huge compromise after all…
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