Bush: Ignore My Lips

And forget Sununu too, Bush tells Congress, as he calls a budget summit and hints that it may even talk about -- shhh! -- raising t---

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A common assumption is that the summiteers will remove the cost of the S&L bailout from the budget. But there will be strong resistance to cutting the remaining $60 billion off the deficit. There is a legitimate concern that so huge a whack would put too great a strain on the economy, which, though it has so far avoided recession, is growing at a snail's pace, 2.1% in this year's first quarter.

Whatever deficit reduction might be agreed on would probably be divided about equally between spending cuts and tax increases. But which taxes? The most obvious target is the least likely. The White House in practice has already revised the "read my lips" pledge to mean no new income taxes. Bush has gone along with increases in other levies, such as the Social Security payroll tax, and has actually proposed hikes in excise taxes and so-called user fees, a term to which the White House has given an extraordinarily broad definition. But all signs are that the President will hang tough against any increase in income taxes, lest he make a total mockery of his campaign rhetoric.

Higher "sin" taxes on such goods as liquor and cigarettes are relatively uncontroversial but would raise only about $10 billion next year, well short of what is needed. Energy taxes would pull in serious money, $20 billion next year with a $5 per bbl. tax on imported and domestic oil, but in the past they have ignited sectional conflicts. Higher gasoline taxes would disproportionately hurt Westerners, some of whom virtually live in their cars, while an oil-import tax penalizes Northeasterners, who heat their homes largely with petroleum from overseas. There is much talk about sliding around these difficulties by imposing a single tax on all forms of energy production and consumption -- oil, coal, hydroelectric, natural gas, domestic, imported, what-have-you. Besides treating sections of the country more or less equally, such a tax would promote conservation and possibly help the trade balance by discouraging imports. But there are also objections. Since it would have to be based on the BTU (British thermal unit) content of various fuels, it would be hideously complex to calculate and collect, and it would harm some American industries that remain competitive in world trade largely because of their access to fairly cheap energy.

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