Editorial: Abandoning a core belief

Friday, Nov. 19, 2004 | 4:42 a.m.

WEEKEND EDITION

November 20 - 21, 2004

President Bush has made it clear he will aggressively pursue tax reform in his second term. It is noteworthy, however, that Bush isn't advocating what was once a core principle for conservative Republicans -- fiscal discipline. The situation is even more interesting in light of recent polling on the budget deficit and tax reform.

An Associated Press poll taken soon after the election found that only 2 percent of respondents named taxes as a top priority. Further, when asked what they preferred the president to make a priority -- balancing the budget or cutting taxes -- by a more than 2-1 margin the budget was picked over taxes. Economists, too, are concerned about the budget deficit, which in the most recent fiscal year was a record $412 billion. The Wall Street Journal's Web site surveyed 55 of the leading economists and reported that more than half of them said the budget deficit will be Bush's biggest economic challenge. One in three economists said the budget deficit should be the chief concern for Bush, while just one in four named tax reform.

Both polls were conducted before word leaked out last week about what the president is considering in the way of tax reform, which he has said should be revenue neutral. The Washington Post reported that Bush is looking at ways to protect dividends and capital gains from being taxed and also is reviewing the expansion of tax breaks for business investment. To offset this loss of revenue, Bush is considering eliminating the deductions people receive for state and local taxes on their federal income tax returns. The president also is weighing a proposal that would eliminate the tax deduction that businesses receive for providing health insurance to their employees. Great. Not only will businesses and the wealthy further benefit under Bush, but regular taxpayers also will lose important deductions and some might even end up losing their health insurance if em ployers decide to drop this benefit because it's no longer tax deductible. Our guess is that the public will be even less e! nthralled about overhauling the tax system -- if that's possible given how little support there is now -- if Bush pushes these drastic changes.

All of this comes at a time when Bush, for the third time in his presidency, signed legislation last week raising the debt limit, this time by $800 million, so that it now totals $8.18 trillion. It's a shame that Bush hasn't made reducing the deficit a priority. President Clinton did reduce the deficit and the economy prospered because of this fiscal responsibility. Forgoing tax cuts might mean alienating some of Bush's top campaign contributors, who would stand to benefit handsomely otherwise. But it genuinely would be in the national interest to do the right thing, and work on reducing the deficit, so future generations aren't saddled with having to pay off this enormous debt caused by fiscal irresponsibility.