Newsday (New York, NY)

September 4, 2001 Tuesday QUEENS EDITION

SECTION: VIEWPOINTS, Pg. A25

Democrats Will Have to Demand a Cut in Tax Cut

by E;J; Dionne Jr; E;J; Dionne Jr; is a syndicated columnist based at The Washington Post; Marie Cocco is off

President George W. Bush and Democrats in Congress begin a budget battle this week that will shape the political perceptions of Americans into next fall's elections and define the choices we will have to make. Both sides have serious problems.

For now, Bush's are bigger. The president's tax cut and the lagging economy mean that he can't keep promises he has already made, precisely what his critics predicted. The government is short of the cash Bush said just a few months ago would be there in abundance. Put aside for a moment whether dipping into the Social Security surplus to finance the rest of government is a big deal or not. The president said flatly it was something he would not do, and now, according to the Congressional Budget Office, he'll have to do it.

Bush was unequivocal. "To make sure the retirement savings of America's seniors are not diverted to any other program," he declared in his Feb. 27 speech to a joint session of Congress, "my budget protects all $2.6 trillion of the Social Security surplus for Social Security and for Social Security alone." Voters know a promise when they hear one. And they know when a promise is broken.

It will be very hard for Bush to say Congress is breaking the budget. The president himself wants to hike spending on the military and education, and has promised new benefits, including expanded health insurance coverage and a prescription drug benefit under Medicare. Here again, it will turn out that Bush's core claims about his budget and his tax cut were wrong.

That's the Democrats' big opening, and they're seizing it with a demand that Bush introduce a new budget because his old one doesn't add up anymore. Bush will no doubt slip by that request, but not the idea behind it: That he now faces harder choices than he did when he could base all his budget numbers on robust economic growth that, for now, is a thing thing of the past. The heart of the Democratic strategy is to force Bush to make public choices, and try to put off their own.

But Democrats face the same inexorable logic Bush does. As one Democratic adviser said: "There are only three options here. You cut spending. Or you go into the Social Security and Medicare trust funds. Or you roll back this tax cut." This adviser thinks that Democrats may succeed in putting the onus on Bush over the shortrun, but must at some point "belly up to the bar" and declare their own choices. There is simply no way for Democrats to do what they want to do without rolling back significant parts of the Bush tax cut.

The obvious way to force an honest debate is to take pieces of the tax cut, starting with the parts that go to the very wealthiest of Americans, and stack the money involved against what it would buy in popular programs, beginning with a prescription drug benefit for seniors. Given a choice between tax cuts for the wealthy and the programs, worried one Republican consultant, "I think the tax cut loses." But this strategy would require many Democrats who voted for the Bush tax cut - there are 12 of them in the Senate - to turn around and rescind parts of what they had just recently supported.

An affirmative strategy could also divide a party that, especially in the House, is relatively united in its criticisms of Bush.

Liberals and moderate budget hawks agree that Bush's tax cut was a mistake. But the Democratic budget hawks oppose it mainly because it endangers the surplus. Many of the liberals are chafing at a public rhetoric of fiscal rectitude, knowing that Bush could turn such rhetoric back on those who propose new programs.

A top aide to House Democrats argues that liberals will need patience, and should try to wait Bush out, since Republicans can block most Democratic initiatives. With Bush in the presidency and the GOP in control of the House, "I don't know where we're supposed to get the money for child care" or a slew of other worthy causes.

Challenging the credibility of Bush's budget promises, in this view, is the first step in a long war that will be fought through the entire Bush presidency.

Still, most Democrats believe the tax cut was a mistake not only because of its effect on the Social Security trust fund, but also because it blocks programs they believe are necessary. At some point, they will have to come right out and say so.