White House Says Bush Committed to Tax Cuts

September 20, 2005

Despite calls by critics for tax cuts to be shelved as a result of Hurricane Katrina, the White House is planning to make recently passed tax cuts that were only temporary into a permanent fixture. From Reuters via Yahoo News:

The White House on Tuesday played down suggestions from U.S. Treasury Secretary John Snow that an effort to make President George W. Bush’s tax cuts permanent would be sidelined by the Hurricane Katrina recovery. “He’s saying what we all are — the Katrina recovery is the top priority, but we remain committed to President Bush’s economic program, which has helped create millions of jobs,” White House spokesman Trent Duffy said.

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The number one thing that we need is for Congress and the White House to be clear on its policy outlook in light of the uncertainty over both the budget and tax policy. Ask any economist, business owner, or investor, and they will tell you that their number one adversary is uncertainty.

We commend the President for keeping with his push for permanent lower tax rates, but what everyone in Washington needs to learn is that tax cuts that are merely temporary are nearly always bad public policy. Temporary tax cuts that merely include the possibility of eventually becoming permanent not only create economic disturbances today, but can create a “boy who cried wolf” scenario later with regards to the reliability of fiscal policy.

Finally, Hurricane Katrina should not put tax reform on the backburner. If anything, these times of economic uncertainty support the case for reforming the confusing tax code we have. Instead of President Bush and Congress rushing to complicate the tax code even further (like they have done with the recent energy bill), they should focus on the economic reality that long-run tax simplification is the best policy path.


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