Taxes: Rebate and Switch.(Brief Article)

After weeks of flailing, Democrats have found a criticism of President Bush's tax plan that works. It does too little, they say, to stimulate a slumping economy. They're right. Bush's tax cuts would be phased in quite slowly, so most of the relief would occur long after any recession was over. That's the reason the president's economic advisers profess agnosticism about whether the tax cut will help the economy this year-even as Bush travels around the country telling crowds that the tax cut is necessary precisely to help the economy.

The Democrats' alternative is an immediate tax rebate that would return $60 billion of this year's surplus to taxpayers. This plan, however, would not stimulate the economy either. It would give consumers more money to spend. But consumer spending is not the problem with today's economy: Such spending has been rising. It's investment that has been declining, and a rebate would do nothing to stop that decline. Cutting tax rates, on the other hand, would increase incentives to work, save, and invest.

The weakness of the economy argues for accelerating Bush's tax cut. Republicans have feared to propose a faster tax cut because a faster one would be a bigger one, and a bigger one would be vulnerable to the charge of threatening Medicare. Specifically, the government would have to dip into the Medicare trust fund in 2003 and 2005 in order to finance a bigger tax cut-if, that is, you believe in Washington's make- believe ...