Sunday, July 26, 1998

Gingrich's re-election snake oil

By Joseph Spear

There are many similarities between politicians and snakes.

For example, both creatures periodically molt and grow new skins. But the fresh epidermis doesn't change the basic fact that underneath it all, they are still politicians and snakes.

It is this process, in fact, that makes politicians so darned entertaining.

They can go along for weeks and sometimes months with their cute little mugs all scrubbed up and their halos all shined, pretending they're in the game to serve mankind and safeguard American values, but sooner or later, they revert.

Which brings me to Newt Gingrich and the debate over what to do with the breathtaking budget surpluses looming on the horizon.

Newt says he wants to keep America great by returning vast portions of these surpluses in the form of tax cuts.

What he doesn't say much about is that a tax cut would also provide the public with a Really Big Reason to Re-elect Republicans.

The problem has been that the surpluses, as vast as they were predicted to be, were never quite big enough to fix the ailing Social Security program, which President Clinton wants to do; to retire a portion of the $5.5 trillion national debt, which a wise but pitiably small faction of legislators want to do; and to hand out tax cuts as well.

Indeed, the most pessimistic projections of all were those calculated by Speaker Gingrich's own accountants in the Congressional Budget Office.

In April, the CBO said there may be an overage of $18 billion this year. A month later, they upped the figure to perhaps $50 billion - still not enough for Newt's tax-cutting dreams. So Newt went to work to boost the numbers.

In June, he and his leadership team dispatched a letter to the House Appropriations Committee complaining that the CBO consistently underestimates economic growth and fails to take adequate notice of the added tax revenues that the robust economy brings in.

"The CBO must address this problem," Gingrich wrote. "If it does not, I believe we must review the structure and funding for the CBO in this appropriations cycle."

You get the point, I'm sure. Either the CBO would produce the numbers that Mr. Gingrich likes, or the CBO would be fired.

This is not the way to run an economy, pointed out Rep. John Spratt of South Carolina, the senior Democrat on the Budget Committee.

"Even if the CBO has not always been right, it has been honest, rigorous and professional, and its virtues have served us well."

He further noted that "three years ago, the Republican Congress shut down the government, insisting that the president use CBO estimates. Now ... Republican leaders want to shut down the CBO because they do not like CBO estimates."

It may be coincidence, but a short while ago, the CBO came out with a new estimate of anticipated surpluses.

Now, they say, revenues could exceed expenditures by a staggering $1.6 trillion over the next 10 years. Needless to say, Newt is ecstatic.

At least a trillion of those dollars should be distributed as tax cuts, he said in a recent speech. "You cannot afford to leave $1.6 trillion in Washington, D.C., where they will spend it.

And so here is a package that gets it all back home."

And, perchance, get lots of Republicans re-elected.

Meanwhile, the Wall Street Journal is urging Newt to clean house at the CBO anyway.

"The CBO needs a director who will take into consideration what makes an economy grow or shrink.

The name for this common-sense approach is 'dynamic analysis.'

This year's high revenue feedbacks from lowered capital-gains taxes are a model of dynamic analysis at work. ... These are macroeconomic facts of life, and it is time somebody on the Hill produced trend lines that reflected them."

Does this idiom sound suspiciously like "supply-side economics" to you - that old bull about huge tax cuts generating such gobs of revenue that deficits are rendered irrelevant?

Yeah, sounds like that to me, too. They've got a new bottle and a pretty new label, but it's the same old snake oil.

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