With the economy faltering, the need for an immediate tax cut is growing more obvious.
President George W. Bush is promoting a $1.6 trillion tax reduction package over 10 years. But his plan doesn't provide for nearly as much immediate tax relief — only about $5.6 billion this year — as many in Congress would like. Bush wisely is listening to proposals that call for an accelerated $60 billion tax cut.
One of the more intriguing plans is being floated by Sen. Joseph Lieberman, D-Conn., the 2000 Democratic vice presidential nominee. Lieberman is proposing an immediate $300 tax refund for every worker in America. Lieberman estimates it would cost about $60 billion to give $300 back to the almost 200 million taxpayers in the nation.
Republican Senate leaders have not released details of how their $60 billion tax cut would be distributed. The goal of both plans, though, is the same — to provide an immediate stimulus to the economy.
Bush has visited more than a dozen states — he was in Missouri Monday — since he unveiled his tax cut proposals on Feb. 27, lobbying for his economic agenda. He used a family from Maine to detail how his proposals benefit the middle class.
Willard and Karlene Hannington, who have three children, make about about $54,000 a year. Under Bush's plan to cut income tax rates, ease the marriage penalty, phase out estate taxes and expand the child credit, the Hannington's $2,850 federal income tax bill would drop to $700, according to the White House.
Bush is confident he can speed up tax relief while staying within his $1.6 trillion proposal. One way to do that would be to delay some aspects of his plan.
At the moment, Congress should give full attention to all proposals on the table. For the American public, the good news is that the public dialogue has shifted from debate over whether a cut is needed to one that focuses on how much of a cut to give and how soon. The rhetoric that dominated last year's presidential campaigns has shifted considerably.
To this we would add only two cautions. Tax cuts should not come at the expense of a healthy payment on the principal of the nation's enormous debt, nor should they delay meaningful Social Security reform.
Tax cuts need to take into account the uncertainty of the economy. Some members of Congress are proposing a "trigger" mechanism that would delay or block a phase-in of tax cuts if debt reduction goals aren't reached. Bush has said he's open-minded to any good idea.
That's good. At this point, everyone should be open-minded. But for both the short-term and long-term benefits of the economy, the arguments in favor of an immediate $60 billion tax relief measure, in a form that benefits the most people, are persuasive.