Stumbling Blocks to a Bush Tax Cut

Dec. 21 -- President-elect George W. Bush may well be war-weary after hiscourt battle to win the Florida vote, but he might find putting intopractice his promised tax cut an even greater struggle.

A set of tax-relief proposals gleaned from the huge U.S. budget surplus totaling $1.32 trillion was the centerpiece of Bush’s presidentialcampaign, but the road from tax-cut promise to tax-cut reality is loadedwith obstacles.

The Democrats, who campaigned for a more targeted tax breakintended to help those in lower-income brackets, said Bush’s tax cuts wouldbenefit only the wealthiest Americans and are staunchly opposed to it. Alsoagainst tax-cut plans is Dennis Hastert, the Republican speaker of theHouse.

One more stumbling block might be Federal Reserve ChairmanAlan Greenspan, a key driver for helping to pass President Clinton’sdeficit-reduction initiatives, and someone who might frown on a tax-cutplan that might add to inflationary pressures and diminish the budgetsurplus. Bush doesn’t want to pick a fight with the Fed.

Slim Hope for Pushing Through New Initiatives

The big questions ahead for the next president — and the country — are:Can Bush navigate these treacherous waters and get a major tax-cutinitiative approved? And, even if he does, can it even provide anynear-term balm to an economy that shows signs of weakening?

The answer to the latter appears negative: The effects of any tax cutaren’t typically felt immediately, rather taking months at the earliest,and sometimes years to filter through, notes Mark Zandi, chief economist atEconomy.com. Given that Bush’s proposal loads many of the biggestcuts on the back end of the 10-year plan, this may be true in the eventthat it comes to fruition.

On the former question, the razor-thin Republican majority in the newCongress will make pushing through ambitious political reform of any kinddifficult, says Dennis J. Goldford, a professor of politics at DrakeUniversity.