Politics - Bush hits road to sell his tax cuts

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ET

AFTER a shrewd attempt to charm Congress into backing his huge tax cut, President Bush set out yesterday on a nationwide tour to persuade sceptical Americans of the benefits of a $1.6 trillion (more than £1,000 billion) refund.

Mr Bush visited Beaver, Pennsylvania, the first of five stops across America, to tell people that the projected budget surplus of $5.6 trillion over the next decade was "your money, not the government's money". Still seeking the majority he needs to get the measure through Congress, Mr Bush made clear his intention to recruit the voters as allies in his efforts to sway the House of Representatives and the Senate.

He told the people of Beaver: "It is so important for members of the Congress to realise what the average citizen is going through today." He cited the faltering American economy as the main reason for putting such enormous sums back into the pockets of the taxpayers as a stimulus to spending.

To wild cheers from Republicans, Mr Bush said in his first major speech to Congress on Tuesday night: "The people of America have been overcharged and on their behalf I'm here asking for a refund." But since he first announced plans for the biggest tax cut in history during his election campaign, opinion polls have consistently shown that Americans question the wisdom of such a move.

Latest figures suggest that 43 per cent of the population back the full tax cut but a little over half believe that, with a recession looming, it is too risky. In his speech to Congress, Mr Bush presented his 2001 budget and tried to soothe his political opponents by trumpeting plans for spending more on education, health care and pensions before he even mentioned plans for a tax cut.

He told Democrats he was offering a "responsible and reasonable" budget and was increasing spending across the board, but then, in an appeal to his Republican base, he promised new spending on the military and a reform of the welfare state. The President said: "Year after year in Washington, budget debates seem to come down to an old, tired argument: on one side, those who want more government, regardless of the cost; on the other, those who want less government, regardless of the need.

"We should leave those arguments to the last century and chart a different course. Government has a role, and an important role. Yet too much government crowds out initiative and hard work, private charity and the private economy. Our new governing vision says government should be active, but limited; engaged, but not overbearing."

Citing his desire to increase spending and protect vulnerable welfare programmes for the elderly and the poor, he also offered a sop to moderate Republicans who believe that some of the surplus should be used to reduce America's monumental national debt. He said he would "retire" $2 trillion of the current $3.4 trillion debt over the next decade and still have money left to fund the huge tax rebate.

But Democrats responded instantly by condemning the tax plan, saying it disproportionately favoured the wealthy and took risks with America's fragile economy. Senator Robert Byrd, a senior Democrat, said the budget proposals were "sheer madness". Other senior opposition figures said the President's numbers did not add up.

Senator Joe Lieberman, a conservative Democrat who was the unsuccessful candidate for vice-president, said: "The president is going to suggest that this is a blueprint for a new beginning. I think it's a copy of some old failed ideas." At least two liberal Republican senators have said that they cannot vote for the Bush tax cutting proposal as it stands.

With the Senate split 50-50, there are few in Washington who believe the President will win the first serious battle of his administration.

-- Anonymous, March 01, 2001

Answers

Telegraph Op-Ed

We want a refund, too

THE conventional wisdom in Europe, even among Right-of-centre parties, is that large tax cuts are politically impossible in an advanced democracy. Across the Atlantic, that timorous assumption has been challenged by the new Republican administration. Breaking with the big government nostrums of the Clinton era, President Bush proposes a fiscal reduction of $1.6 trillion over the next 10 years.

On Tuesday night, he laid an arresting choice before Congress. Federal spending could continue substantially to outstrip economic growth. The alternative was "to let the American people spend their own money to meet their own needs". Mr Bush ascribed the rising budget surplus to the fact that "taxes are too high and government is charging more than it needs". He added: "The people of America have been overcharged and on their behalf I am here to ask for a refund."

The contrast with New Labour could hardly be greater. It thinks of the state as a benign institution distributing largesse to the worthy. It talks of giving money back to the people, without seriously questioning its right to take it in the first place. Compare Mr Bush's attitude towards the American surplus with that of Gordon Brown towards the British. The Chancellor, having raised the fiscal burden through stealth taxes, now proposes to dispose of the resultant revenue in a huge electoral bribe. Mr Bush intends to halve the growth rate in government expenditure and simplify and lower income tax. Most courageously, he proposes to abolish inheritance tax, a step at which John Major notably balked, despite repeated pledges. Mr Brown aims to win votes by making the electorate more dependent on the state. Mr Bush, while not neglecting the need for fiscal discipline, appeals to people's desire to have a greater say over what they earn.

That contrast should present an obvious target for the Tories. Yet Michael Portillo, the shadow chancellor, seems to defer too much to the conventional wisdom of a continent dominated by Left-of-centre parties. His proposed spending cuts, of £8 billion over the life of the next parliament, are too cautious to make much political impact. Instead of offering a radical alternative to Mr Brown's tax-and-spend philosophy, he finds himself fundamentally playing the same game as New Labour.

Is it a question of vision? In his wish for government that is "active, but limited, engaged, but not overbearing", Mr Bush harks back to the concept of personal freedom that informed Ronald Reagan's whole career, one that would provide a welcome contrast to Labour's illiberalism. Yet the Tories as a whole do not articulate it with sufficient conviction. They should learn from a fellow conservative across the Atlantic. The era of low taxes belongs more to the future than the past.

-- Anonymous, March 01, 2001


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