Yet there's still something about big fat tax cuts — and those big fat unprecedented surpluses — that make people nervous. With Brave New Worlds rolling around almost annually these days, isn't there a safer way to give the people some money back without making promises that 2010 mightn't be able to keep? And so here come the op-ed page alternatives.
David Broder, in his Washington Post column on Wednesday, and Harvard economist Richard Freeman and think-tanker Eileen Appelbaum in the New York Times on Thursday, all raise the admittedly intriguing idea of the "prosperity dividend." The gist: Wait until the surplus is a surplus before you send it back. At the end of the fiscal year, if there's money left over in the federal budget, simply cut every taxpayer in America a check.
Cha-ching. Holiday money (Freeman guesses $500, Broder $1,000) for hard-working Americans, direct stimulus for the economy, and a balanced budget for all, based on actual budgets, not projected ones. Everybody wins. And to hear Broder tell it, it's self-sustaining.
The late-summer pork grab
"This plan also creates a broad and strong constituency for economy in government. Any new spending proposal would encounter the argument that it would reduce the rebate kitty by that amount and cost the average family a specific number of dollars."
Would it? The most obvious problem with any plan involving money "left over" is that Congress, by the time it gets through a year of legislation and the annual late-summer pork grab, hardly ever leaves any money left over (unless putting the current year's spending on next year's books, one of the boondoggles of the post-spending-caps era, counts as saving).
This is why the surpluses still have the whiff of fantasy about them — not because the White House and Congressional Budget Office's forecasters are too rosy with their economic-growth projections, but because they take congressional spending projections at their word. The advantage of taking money for a tax cut off the budgetary table in March is, well, that it's off the table. Let the taxpayers eat first, and let the ethanol subsidizers and reindeer researchers fight over the leftovers, instead of the other way around.
Broder's nose for "a broad and strong constituency" may be right; after all, here's a man who's been around Washington longer than the Potomac. And matching new programs directly against the public pocketbook would certainly prick up a few voter ears. But there's already a "broad and strong constituency" for economy in government, along with one for campaign finance reform, a cleaner environment, improving the nation's schools and ending poverty, and look where that's gotten the voters. That's why only half of them vote.
The time is now
Besides, when you don't get as big a rebate as you want at Christmas, whom do you vote against the next November? The whole of Congress?
Which brings us to the way the government spends the money it does. The folks who really write the tax code and the budget — lobbyists, corporations — already get bushels of perks, loopholes and other tax relief, and when it comes to getting more, they're still way ahead of the rest of us in line. If politicians can buy off the voters with, say, $500 a year, we'll never even get in the store, and they'll never get around to cleaning up the $500 billion federal bdget.
As Broder himself says, "Admittedly, this is not long-term or comprehensive tax reform. It does not address any of the inequities or loopholes in the internal revenue code."
Darn right. Tax reform — and tax-code simplification, which could be the best way to reignite the kind of civic optimism central to good democracy — has a broad and strong constituency too. But momentum for it comes around once in a blue moon, usually when it comes time to cut taxes. Which is now.
A $1.6 trillion, 10-year tax-cut plan is an opportunity. Not to fight a possible recession that could be over by summer — that's the Fed's job — but to reset the federal government's expectations of how much its constituents should be forking over every April. And to cut some of the fat out of the two flabbiest documents in the free world: the tax code and the federal budget.
It's a lot to expect from Paul O'Neill. But expecting congressional Democrats and Republicans to scrimp and save every year in order to send Americans an annual surplus dividend for which they'd share the credit? That's a very long shot indeed.