President will face strong pressure for increase to pay for economic agenda By Tom Raum, Associated Press
NEW YORK — At their national convention, Republicans were long on rhetoric and short on specifics on how to pay for an economic agenda in a second Bush administration.
One reason is that President Bush could end up having to back a tax increase, just as his father did.
But nobody wanted to spoil the Madison Square Garden party by mentioning such unpleasantries. After all, Republicans are insisting that Democrat John Kerry is the candidate who will increase taxes. …
“Taxes are going up next year no matter who wins the presidency in November,” concluded conservative economist Bruce Bartlett, who advised both Ronald Reagan and the first President Bush.
“It’s out of the hands of politicians,” Bartlett said.
The annual $400 billion deficit leaves little room to maneuver. The shortfall was exacerbated by two earlier tax cuts that Bush pushed through as well as rising costs for Iraq, Afghanistan, homeland security and a major expansion Medicare.
Furthermore, the Federal Reserve has embarked on a course of raising interest rates from their recent 40-year lows. Higher interest rates combined with a continued weak dollar will put more pressure on the government’s balance sheet. …
At the convention, Bush was silent on how to pay for any of his second-term proposals.
“A presidential election is a contest for the future,” Bush told the party faithful. But on the economic front, most convention speakers could not help but look back to what Vice President Dick Cheney celebrated as “the greatest tax reduction in a generation.”
Republicans like to suggest that Bush is following in the path of Reagan, who pushed through Congress the then-biggest tax cut in U.S. history in 1981.
What they usually neglect to mention is that the following year, Reagan reluctantly signed one of the biggest tax increases in history.