Kennedy Savaged By Friend And Foe After Tax Cuts Speech

by Mike Godfrey, Tax-News.com, New York

21 January 2002

In a speech to the National Press Club on Friday, Senator Edward Kennedy (D - Mass.) called for parts of President Bush's $1.35 trillion tax cutting package to be postponed, including upper-income individual rate reductions and full repeal of the estate tax. Mr. Kennedy's wants to find $350 billion to fund Democrat priorities including a prescription-drug benefit to Medicare.

Mr. Kennedy is brave to speak out against tax cuts when recent polls have shown that a considerable majority of Americans want to keep the package in place. But it may be that he see little political risk in challenging tax reductions that go mainly to upper-income individuals, and in any case have yet to take effect.

The speech was a gift to Mr Bush, who immediately riposted: "I think raising taxes in the midst of a recession is wrong economic policy. It'd be a huge mistake. It's bad for American workers. It'll hurt when it comes to creating jobs. And so I strongly disagree with those who want to raise taxes here in Washington, D.C.," he added.

Treasury Secretary Paul O'Neill pointed out that Mr. Kennedy had worked closely with the White House on education reform. "I wish we could foster that same bipartisan cooperation to create jobs," Mr. O'Neill said, as the Treasury Department issued figures showing that a repeal of the cuts could hurt millions of working families.

Mr. Kennedy stressed in his speech that Congress passed the tax package at a time of record surpluses, and that supporters (particularly Democrat ones, he meant) didn't believe they were putting social benefits at risk by passing the tax cuts bill. "Whatever the merits or demerits of last year's tax bill, it was enacted in what now seems a very different and distant time," Mr. Kennedy said. "We must think anew, and act responsibly."

Senator Kennedy isn't likely to be supported by other Congressional Democrat leaders. Senate Majority Leader Thomas Daschle, (D-S.D.), has vocally criticized Bush's tax cuts, but he didn't dare to suggest they should be reversed. Senate Finance Committee Chairman Max Baucus, D-Mont., said he "respectfully disagreed" with Kennedy and added it wouldn't be "appropriate to revisit the tax cut in the midst of a recession."

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