Repeat Formula

In his latest budget, Bush proposed $8 billion in tax incentives aimed at domestic energy producers. The incentives take the form of accelerated depreciation and deferred taxation on new oil and gas exploration and pipeline capacity. While I’m ambivalent about the wisdom of that, there is at least a reasonable argument in favor: natural gas prices are very high; also, if we increase domestic oil production without going into ANWR, that’s probably a good thing. The interesting part is that in the mark-up stage, the House “tax cut and spend” Republicans increased the incentives to $19b.

Now Energy Secretary Spencer Abraham and a some Senate Republicans, along with the White House, are saying that $19b is too much. See the pattern? The proposal comes in at $8b in new incentives, then in committee it gets inflated to $19b, allowing the White House to then come out as fiscally disciplined when they hold the line at $8b. The initial proposal becomes the compromise position.

This is similar to, though in a slightly different order, the strategy behind the most recent Bush Birth Tax Increase Tax Cut: Bush proposes $750b, Congress (allegedly) trims it to $350b, we then get to hear the leader of the Free World use the phrase “little bitty” (*) to describe the reduced package, and then the package passes (though its true price tag is well over $350b). In the process, $350b becomes the compromise proposal and passes. Republicans get to call themselves fiscally conservative because they reigned in Bush’s dramatic proposal.

Expect to see this play repeated until it stops working.

AB