With the nation at war, the White House has introduced a new justification for President Bush's $726 billion tax cut: Do it for the troops.
Three times in the past week, White House press secretary Ari Fleischer has urged the passage of Bush's tax cut, as he put it Monday, "to make sure that the economy can grow and that jobs can be created, so that when our men and women in the military return home, they'll have jobs to come home to."
Democrats and some moderate Republicans argue just the opposite: that Bush's tax cut is antithetical to the war effort and to a variety of defense and domestic causes in need of government funding. As evidence of this, the Senate voted yesterday to slash Bush's tax cut in half, to about $350 billion. Sen. Max Baucus (D-Mont.) attributed the vote to "concern about the cost and the uncertainty" of the Iraq war. "We've never cut taxes in time of war," he said.
The conflict in Iraq has begun to shape domestic policies and politics in varied -- and often unpredictable -- ways. Most everyone agrees the apprehension about the war caused the economy to stagnate in recent months, but, as the stock market swings in the last week indicate, it is not clear when that uncertainty will end, or even whether the economy will rally just because the war ends.
This guessing game, in turn, has affected the debate about Bush's tax cut. Last week, the Senate appeared on pace to join the House in approving the $726 billion tax cut with only small alterations. But this week, after the White House rolled out its six-month, $75 billion budget request for Iraq, lawmakers, confronting a budget deficit approaching $400 billion in the current year, reconsidered.
Last week, the Senate voted 62-38 against halving the tax cut; yesterday, it voted 51-48 in favor of devoting half of the tax cut amount to Social Security.
Democrats are using the war spending request, which Bush sent to the Hill on Tuesday, as ammunition against the tax cut, arguing that it is not affordable because the war spending request proves the funds are needed at home and abroad. For example, the administration, as part of the bidding process related to the funding request, said it wants to "facilitate rapid, universal health service delivery to the Iraqi population." Democrats say that is a fine idea, but it should also be done at home, where millions lack health insurance.
"The president needs to realize that funding homeland security, winning the war, stabilizing Iraq and dealing with the deficit is far more important to America than shoveling huge wads of cash to the wealthiest sliver of the population," said David Sirota, the spokesman for House Appropriations Committee Democrats.
Similarly, Sen. Christopher J. Dodd (D-Conn.) yesterday linked his support for the war spending to his tax-cut opposition. "I find it disturbing that this request comes as the president continues to dig us further in debt by pushing through a massive tax cut to benefit the most affluent," he said. "That's simply wrong considering our nation is at war and our service men and women are being asked to give the ultimate sacrifice halfway around the world."
The White House has sought to defeat that argument by making a patriotic case for tax cuts. Reading a quote from President John F. Kennedy supporting both tax cuts and defense spending, Fleischer suggested during Monday's briefing that a tax cut, because it would boost the economy, was needed to keep the military strong. "The stronger the economy, the stronger we are as a country," he said. "The stronger we are as a country, the stronger our military." Fleischer argues regularly that the tax cuts are needed so that "when the war is over, our military has jobs to come home to."
The argument has flaws. Those who serve in the military full time need not worry about having jobs when they come home. And under a 1994 law, employers must reinstate reservists in similar positions when they return from service, unless the company can document severe hardship.
Still, the notion of job creation is central to the administration's case for its tax cut. Officials argue that passage by June will result in the creation of 450,000 to 500,000 jobs by the fourth quarter.
Administration officials said yesterday a successful military campaign will remove a significant drag on the economy, principally by helping to lower oil prices that spiked during the winter in anticipation of the conflict. But, a senior administration official said: "Without a jobs and growth bill, I don't think we'll have growth high enough to absorb all the folks looking for work."
The Treasury Department is preparing to release a new study later this week designed to counter criticism of the tax plan as a budget buster. The study, according to a senior official, will conclude that 30 percent to 40 percent of the cost of the package will be returned in the form of tax receipts from higher economic growth.
Staff writer Dan Balz contributed to this report.