(Editor's note: This is the second in a series of articles examing the prospects and promises of President-elect George W. Bush. Everyday this week, leading up to Saturday's inauguration, The Dartmouth will consider a major issue that Bush will have to address during his presidency.)
With the economy headed for a slowdown as his presidency begins, President-elect George W. Bush has renewed his calls for a tax cut, bringing a $1.3 trillion proposal to the table.
For Bush, the recent scaling back of the economy seems to have come at an opportune time. It seems likely that Congress will work with Bush to establish some compromise agreement that, according to House Minority Leader Dick Gephardt (D-Mo.), will give "everybody some of what they want."
However, despite the ripeness of the economy for such a plan, Bush has faced criticism from some based on the size and scope of his proposed cuts, though most seem to agree that some cuts are necessary.
Gephardt has said that, though his party does not support Bush's plan, a tax cut of some sort passing the House is likely.
"I think we need a tax cut," Gephardt said, though he added that he is unsure what size cut would be prudent right now.
Bush previously described his plans as an "integral part of economic recovery."
"The data we've had this week should erase any doubts in anyone's mind that the economy is having some trouble, that it needs some help," Larry Lindsay, Bush's chief economic advisor told the CNN show "Evans, Novak, Hunt & Shields" in a taped interview.
"And whatever we can work out to give it the maximum
help is what we're for," Lindsay added.
However, there are some who are questioning whether there is anything the economy actually needs to recover from.
Leaders in the Federal Reserve as well as President Bill Clinton have warned Bush of speaking too freely of a slowing economy, arguing that his words could create a self-fufilling prophesy.
Despite criticisms, however, Bush has indicated that he will propose his original plan to Congress, perhaps in the first days of his presidency.
Senate GOP Leader Trent Lott (R-Miss.) has said that he believes the tax plan may come before Congress right away in an effort by the White House to capitalize on the tide of political momentum Bush will likely bring in with his administration.
Even with support in the House for some sort of cut, political analysts believe that Bush's current plan is likely to have a difficult time in the Senate due to the even split between Democrats and Republicans.
Bush's proposal fazes in tax rate reductions between 2002 and 2006, gradually lowering the 39.6, 36, 31 and 28 percent brackets by condensing them into lower 33 and 25 percent gradations. The plan also changes tax regulations for those in the 15 percent tax bracket.
Bush will also likely look to eliminate the Estate Tax, a goal approved by the last Congress but vetoed by President Clinton.
Bush's economic proposals have focused mainly on his tax cut plans, however he has also spent time in the past several weeks meeting with Chairman of the Federal Reserve Alan Greenspan.
Bush and his advisors have praised Greenspan for the Fed's decision to cut interest rates earlier this year and have placed a significant amount of faith in the Reserve's ability to have an impact on the economy.
Lindsay declared upon hearing of the rate cuts "Great! The Fed is always right."
Whether Lindsay's statement is indicative of the incoming Bush administration's trust in the Federal Reserve remains to be seen. However, the issue of who is to work more closely with the economy -- the White House and Congress or the Fed -- has already emerged.
House Majority Leader Dick Armey (R-Tx.) said last week that Congress should not feel obliged to defer to the Reserve Bank on economic matters.
"Mr. Greenspan has his job and he will cut interest rates as he sees fit. And we have our job too, which includes bolstering the economy by passing a fiscally responsible, pro-growth tax cut," Armey said.
While some disagree with the specifics of the proposed tax cut plan, both Democrats and Republicans in Congress seem to concur that the legislative and executive branches should play a prominent role in the economy.
With both sides of the aisle calling for some form of tax cut and the incoming president championing the largest of such proposals in history, it seems likely that some plan will be passed.
Despite this consensus, however, the evenly divided Senate and small Republican majority in the House of Representatives make some compromise appear to be necessary if the Bush administration is to pass a tax cut in the coming months.
