Tax Cuts And Tough Love
As this year's W2s are making their way to millions of working Americans' mailboxes amid a slowing economy, President Bush's economic adviser says a tax cut isn't a question of if, but when and how much.
"I would hope that sometime in the second quarter, July 1 at the latest, people could see it, because I think that's really when the economy is going to need it," Bush adviser Lawrence Lindsey told CBS News Face The Nation on Sunday.
But what taxpayers might see come the summer depends on what the narrowly divided Congress decides about Mr. Bush's $1.6 trillion tax cut plan. Democrats are skeptical of the proposal, saying it could undercut the federal budget surplus and would tilt toward the wealthiest Americans.
"It's easy for those people to talk about tax cuts because we all want to do it," Rep. Charles Rangel (D-N.Y.) told Face. But the truth of the matter, that we in the House have a moral and fiscal responsibility to protect the Social Security system not just now, but when it doubles to 80 million people in the year 2030."
At the same time, Mr. Bush and Capitol Hill Republicans are pushing hard for fast action, pointing to a growing list of disappointing economic numbers.
"The surplus is big. The tax level is the highest level in American history, as a percentage of income. And, with the economy slowing down, the idea that we wouldn't give some of the surplus back to the American people I think is just out of touch with reality," Sen. Phil Gramm told Face.
The Bush team's Lindsey said the surplus could afford the tax cut, while the economy needs it.
"The president wants the program he ran on enacted," he said. "The issue is whether or not that program can be accelerated. He proposed phasing it in gradually in order to maintain the growing surplus. If the economy needs it sooner, it might make sense to have money in people's pockets sooner."
Lindsey also defended what could be called the administration's "tough love" attitude toward California over its power crisis. The Golden State's power woes have prompted Mr. Bush to extend Clinton administration directives that force outside power suppliers to keep shipping electricity to California's debt-ridden utilities. That extension ends on February 7 - and the president has made it clear he will not issue any more.
"They should expect no more help from the White House," said Lindsey. "It's not that we don't want to give them the help. If we could send thunderbolts into the electric grid to run electricity, we would do it. We can't."
A major reason, Lindsey explained, is that extensions are beginning to hurt the rest of the West.
"We're running out of water in Arizona ... People are not going to be growing crops in Arizona this summer," he said. "They have shut down paper mills in Oregon, they shut down aluminum smelters in the Pacific Northwest all to accommodate this sending power to California."
Also on the Sunday news show circuit, Vice President Dick Cheney blamed a "faulty deregulation scheme" in the Golden State as the root of its current power woes.
"We're prepared to do those things that we can to help, but the basic problem in California was caused by California," Cheney told ABC's This Week.
Cheney said the state's regulatory process is "so long and drawn-out in terms of getting permission to build anything that there haven't been any major power plants built in California in the last 10 years - even though power consumption is up by 20 percent."
The White House planned a strategy meeting Monday on the problem and is dispatching top energy officials - including Energy Secretary Spencer Abraham - to see Western state governors affected by the power crunch. But the Bush administration cautions that it does not have the silver bullet solution to the mess.
"It's not a problem you can solve with decrees from Washington. It's something that has to be done with tough decisions: more power plants, more transmission lines, more natural gas pipelines," Lindsey told Face.