Original Vision of Government

0 Comments | Insight on the News, July 30, 2001 | by Jennifer G. Hickey

As the economy continued to sputter, the president spoke at Independence Hall in Philadelphia on the Fourth about the need to keep taxes reasonable and government regulation limited.

For many Americans the national holiday that opened this month, the Fourth of July, is just a day off on which the fire department and the local Moose Lodge parade around town to honor a bunch of dead white guys. But for politicians, even in the deconstructionist aughts of this new century, it remains a glorious day on which parades, patriotism and picnics provide' a perfect setting in which to make a political point. Not surprisingly, George W. Bush found himself back in Pennsylvania (a political swing state that he has visited five times this year) standing in front of Independence Hall in Philadelphia and invoking the faith of the Founding Founders to promote his faith-based initiative.

Independence Day, however, served a different symbolic reference for Sen. Kent Conrad, D-N.D., the new chairman of the Senate Budget Committee. "We are on the eve of our national Independence Day, and the irony is that we see our financial independence at risk," said Conrad. He professed that the passage of the tax cut already has produced a $56 billion shortfall in this year's budget surplus and will result in Congress "not only raiding the Medicare trust fund, but the Social Security trust fund as well." Conrad and Bush may have been speaking about two entirely different issues, but for both they are matters of faith.

Despite a continuation of the year-long slowdown in several sectors of the economy, including the horrific technology bust some attribute in part to the antitrust case against Microsoft, the Bush administration has kept faith in the future economic benefit of the $1.35 trillion tax package that began to take effect on July 1. Prior to meeting with European finance ministers, Treasury Secretary Paul O'Neill stressed the continued strength in U.S. automobile and housing sales as consumer confidence intermittently suffers bouts of unease and nerves.

Opting to talk up the positive (lest the administration be accused of talking down the economy), O'Neill asserted there is "real strength in our economy," adding that he is "confident the U.S. economy will move to a higher growth rate later this year," a theme echoed by White House Press Secretary Ari Fleischer. With House and Senate campaigns not set to begin for another six months and the impact of tax cuts yet to be realized, the coming months will be a continued test of economic faith for the administration.

In an ironic twist, as sports-utility vehicles (SUVs) and other trucks have been demonized as "verboten vice" in the same category as cigarettes and dodgeball, American consumers still have not opted to sacrifice their safety and comfort so the trailing pack of environmentalists will eat them last. General Motors saw its June truck sales rise by a record 8.6 percent, easing some of the pain caused by a 13.5 percent drop in car sales.

But, latching onto recent comments by Bush economic adviser Lawrence Lindsey that "an economic slowdown that began last September" had "definitely slowed revenues," Conrad blamed the six months of economic stewardship by the Bush administration. A graduate of Stanford University, with an M.B.A. from George Washington University, he squarely placed the blame for the six-month slowdown (before which nothing of note ever occurred) on the Bush team, averring that "after assuming responsibility for the fiscal affairs of this country, grabbing the steering wheel, have drove [sic] us right into the fiscal ditch." Naturally, Conrad pointed to his own pre-science in budgetary matters: "I warned the tax cut was too large, that it risked precisely what is happening" which is "we face a raid" of the Medicare trust fund.

"This tax cut is coming at the right time," rebuts Office of Management and Budget (OMB) spokesman Amy Call. With the Senate now in Democratic hands, Conrad welcomed the election year by calling for OMB Director Mitch Daniels and O'Neill to appear before the Budget Committee the week of July 9. Considering the tone set in his press conference, Conrad likely will try to grill O'Neill and Daniels, but can these hearings be anything but fodder for Democratic fund raising?

"It has nothing to do with politics," a Democratic committee aide, who declined to go on the record, curtly responded when Insight asked. Rather, the hearing was "prompted in part" by Lindsey's comments and "has to do with how much money is going to be available to fund important programs and to determine whether we are going to be raiding the Medicare and Social Security trust funds."

The administration, on the other hand, argues it is difficult to raid a trust fund that does not exist. "If you look at the whole picture of the Medicare program, with Part A and with Part B running an $80 billion deficit, there is no surplus in the program," adds Call. OMB is expected to release its own budget analysis shortly before Labor Day.