OK, so older brother George W.'s job isn't easy either. But he does have one advantage Jeb would love: He doesn't have to budge on taxes. This month the President told Democrats they would freeze his tax cuts "not over my dead body," (we'll just ignore that creative syntax). But last month Jeb had to delay $128 million dollars in tax relief. Both Florida and the nation are facing tough economic times and shrinking tax revenues. But while state governments have to balance their books, the feds can get away with deficit spending, at least for a while.
Jeb didn't freeze his tax cut lightly. He spent much of his first term making generous reductions, though nothing like the $1.6 trillion break his brother enacted. But after 9/11, Florida had a $1.3 billion hole in its $20.3 billion budget. Bush and the legislature made a series of painful cuts in services, including a $591 million slash to public education.
But Florida is one of a small handful of states that still relies on sales taxes for its money instead of an income tax. When your leading industry is tourism, those sale taxes can be generous, but in hard times, they dry up even faster than other taxes. So Jeb had no choice but to save $128 million by delaying the tax cut for a year. Not an easy choice to make with an election coming up, but Bush has had solid approval ratings for most of his term. And he's not alone: Republican governors in New York, Michigan and Louisiana have proposed delaying tax cuts this year as a way to shore up their budgets.
His brother isn't having to make such painful decisions. Not only will the federal government run a deficit this year, thanks to the recession, the tax cut and the war on terror, but President Bush will propose a budget in the next few weeks that projects a deficit just over $100 billion for fiscal 2003. No surpluses are projected until the latter half of the decade. Bush has reacted angrily to a suggestion by Ted Kennedy that the part of his tax cut that goes to the wealthiest Americans should be repealed before it goes into effect in 2005. Most Democrats aren't even asking for that despite their criticism of the tax cut because they know the issue is not a winner with midterm elections coming up.
The President insists Kennedy's idea would be a tax increase. Now, I have to confess I'm not so good at math, but how is repealing a tax cut before it goes into effect a tax hike? Bush argues that people are planning on having that extra money, so taking it away would effectively be a hike. Anyone else smell fuzzy math?
More comic is the Bush administration's insistence that the president's brother may be freezing a tax cut of his own, but he's not raising taxes. When pressed on this, George W. and his team argue that states play by different financial rules. They have to balance their budgets every year. The only slip so far has been by new Republican National Committee chairman Marc Racicot who when pushed on whether Jeb was raising taxes told reporters, "I think that argument could be made, yes." Eight hours later, Racicot issued a statement saying he did not believe Jeb had raised taxes.
Fuzzy definitions aside, the Bushies do have one thing right. States do play by a different set of rules and they cannot afford to have deficits. Financial lenders give states credit ratings based on their fiscal discipline. If your personal credit rating is bad, you cannot borrow money from anyone unless their idea of a late fee is breaking your leg. States with bad credit ratings face similar problems.
The federal government can run deficits, but that doesn't mean it's a good idea. When the national debt is rising, the long-term financial outlook seems more uncertain and banks keep interest rates high, no matter how much Alan Greenspan cuts the prime rate. During the 1991-92 recession, the Federal Reserve cut the prime rate and bank rates barely budged. That kept the economy in low gear. Now the economy is in a recession again, and in one year the federal government has gone from endless surpluses to a return to deficits. There may be a war to pay for, but the feds could learn something from the states. And the president could learn something from his little brother.