THE MIDTERM ELECTIONS have been described as shapeless, with local issues and personalities crowding out national policy disputes. But listen to President Bush stumping for Republican candidates, and you'll get a different feeling. On Monday, for example, Mr. Bush told an audience in New Mexico that "we need to have us a congressman who will join me in making sure that the tax relief is permanent." A bit later that day, he told a crowd in Colorado that, "for the sake of strengthening the small-business sector in America, you need to send people to the Senate and the Congress who will make the tax relief permanent." For good measure, the president told the Colorado voters about a hitherto unremarked connection between development and the estate tax. "One of the reasons why urban sprawl can get out of hand is because farmers and ranchers are forced to sell their property before they want to because of the death tax," Mr. Bush maintained.
Mr. Bush's original tax cut began life as a campaign tool, designed to secure the conservative base of the Republican Party during the 2000 primary campaign. It is not surprising that, in low-octane midterm elections in which turning out the base may be the key to victory, Mr. Bush is reviving the tax issue. Yet the president's rhetoric is troubling. His reference to the estate tax perpetuates the absurd mythology around the subject. In 1999, the last year for which data are available, a grand total of 26 estates in Colorado paid any inheritance tax; besides, farmers' heirs aren't forced to sell out because of it, because the first $2 million of property that's passed on carries no tax and the rest carries a tax that can be paid off over 20 years. Meanwhile, Mr. Bush's talk of making other tax cuts permanent raises questions about his grasp of the economic challenges facing the country and mocks the reasoning behind his original tax policy.
In the 2000 campaign, Mr. Bush claimed over and over that the country could afford a tax cut without dipping into the Social Security surplus. The economic slowdown and war-related expenditures have proven him wrong: In the fiscal year just ended, not only was the entire Social Security surplus spent, but the government's need for money forced it to borrow a further $159 billion. Mr. Bush blames this deficit on the unforeseeable arrival of war and economic slowdown. But if he succeeds in making his tax cuts permanent, it is entirely foreseeable that money will be drained from the Social Security system that he once promised to hold inviolate.
Mr. Bush and his economic team need to confront the fact that, according to the Congressional Budget Office, the cost of Medicare, Medicaid and Social Security will jump from 8.2 percent of the economy to 11.3 percent between now and 2020. That jump is roughly equivalent to a doubling of today's defense budget; the money is going to have to come from somewhere. "We've got to be realistic about the threats we face," Mr. Bush said in Colorado. He was talking about preempting future threats from terrorists. If only he showed similar courage in preempting the coming baby bust at home.