Published January 13, 2015
On his first day back at the White House following a 12-day vacation, President Bush, meeting with his team of economic advisers plus Federal Reserve Board Chairman Alan Greenspan, urged Democrats to set aside "partisan bickering" that could stall economic recovery.
Bush is trying to cast the growing fight over economic recovery as a question of tax cuts versus tax increases. He said any attempt to repeal or revise the 10-year, $1.35 trillion tax cut passed by Congress last June would amount to a tax increase, something the president said this weekend would happen over his "dead body."
"A tax cut is part of the prescription for economic recovery," Bush told reporters before his meeting with his economic team, including Treasury Secretary Paul O'Neill, economic adviser Lawrence Lindsey and Office of Management and Budget Director Mitch Daniels.
"To change in the midst of the phasing in of the tax relief plan would send the absolute wrong signal to the economy. It would say we weren't real about it; we weren't serious about tax relief," he said.
Senate Majority Leader Tom Daschle, D-S.D., set up the debate last Friday with a speech to a group of businessmen, in which he said that the recession, which began last March, was the result of the tax cut. He did not specifically call for repeal of the tax cut, but laid heavy blame on Republicans for the economy's floundering.
Bush responded on Saturday in public appearances in California and Oregon, saying, "Not over my dead body will they raise your taxes."
Though Bush did not mention Daschle by name on Monday, he again referred to the majority leader's speech, saying that any tax hike would be voodoo economics.
"That would be a disaster, to raise taxes in the midst of a recession. Even, I think you'll find that to be the — most economists agree with that point of view, if they're fair about it, they will say that. As I said out there, somebody must be reading a different kind of economics textbook here in Washington."
The debate is heating up as the election year gets into gear. Daschle and other Democrats have suggested that the economy will be a major campaign issue against Republicans in this year's mid-term elections.
The economy, however, is already experiencing a turnaround, in part because of the natural length of recessions, not because of any actions taken by Congress, Lindsey said over the weekend. He said if tax cuts remain in place, they will hasten the recovery.
The pace of recovery was not helped in December when the Senate failed to pass an economic stimulus measure that would have pumped $100 billion into the economy. The House passed the measure in October, but Daschle stalled a vote on the Senate floor.
But last month's 5.8 percent unemployment rate, its highest level in six and a half years, suggests the U.S. economy is not out of the woods yet.
The nation's budget surplus is also in peril. Stanley Collender of the Federal Budget Consulting Group, said the Bush tax cut eliminated at least 25 percent of the projected surplus.
Congressional Democrats say the surplus for the 10 years ending in 2011 would be $1.79 trillion. Republican staffers say it will be $1.86 trillion.
The bottom line is that Uncle Sam's $2 trillion annual budget is likely to end up at least tens of billions of dollars in the red for each of the next several years before returning to surpluses for the rest of the decade, according to a forecast made by Daniels last November.
Bush downplayed the forecast, saying that he warned that deficit spending might be necessary.
"I said to the American people that this nation might have to run deficits in time of war, in times of a national emergency or in times of a recession. And we're still at all three," Bush said.
Bush did say he was going to add an economic stimulus package into his annual budget request, a suggestion Daschle made during his speech.
Greenspan, who attended the meeting as an independent adviser, did not speak, a condition Bush said he and Greenspan agreed upon before his attendance.
"I promised him that he could come. He's an independent soul; he can have a press conference elsewhere. But one of the things we're not going to do is drag the chairman into a press conference, otherwise he won't come back to the White House," Bush said.
Despite his silence, Greenspan has been very active in propping up the sagging economy. In the last year, the Federal Reserve has made 11 short-term interest rate cuts, totaling a five percentage point drop.
Fox News' James Rosen contributed to this report.