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The Speech: Will It Be Good News for Taxpayers?

Real spending restraint, tax relief are needed

All indications are that President Bush’s State of the Union address (to be delivered on Tuesday, January 31) will be relatively taxpayer-friendly. If this prediction proves true, it is welcome news, but advocates for restraining Washington’s reach also shouldn’t ascribe too much importance to it either.

According to all accounts, the President will be offering few new spending initiatives. This is significant, since large expansions of government in recent decades have often come at the behest of the Executive Branch.

The President will also advocate making the tax cuts permanent. This too is a positive message for taxpayers. Congressional big spenders will no doubt be quick to reject this call, claiming that the modest Bush tax cuts are somehow responsible for large federal deficits. However, the latest budget projections from the Congressional Budget Office (CBO) give lie to the argument that there is a shortage of revenue in Washington. CBO projects federal revenues in Fiscal Year 2006 will be 59 percent higher than in 1996.

Of course, if the President’s address is taxpayer-friendly, the next question is whether this will translate into real spending restraint and continued tax relief. Here, taxpayers have much reason to be skeptical.

As studies by the National Taxpayers Union Foundation have shown, there has been a relatively steady decline in recent years in the total cost of proposals in Presidential State of the Union addresses. That decline seems to parallel a rise in White House statements in recent years about the importance of restraining spending. For instance, just last week, the President declared that "I’m fully prepared to use a veto if they overspend." But of course, all of this positive speechmaking and rhetoric has not been mirrored in action, as spending has exploded during the Bush Presidency.

A pro-taxpayer State of the Union address thus should be welcomed by advocates of limited government. But no one must read too much into the speech. At best, it is a starting point in any Administration efforts to finally rein in the profligacy which has been the hallmark of the Bush Presidency.

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Written By

Mr. Berthoud is President of the 350,000-member National Taxpayers Union (www.ntu.org).

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