Regardless of Bush's Rationale, Tax Cut Could Invite a Fiscal Meltdown

That allegation is beginning to bubble up throughout Washington. Among critics, the theory is that Bush privately welcomes the record deficits -- up to $500 billion a year -- projected in the tax cut's wake. The reason: The shortfalls could make it tougher for Democrats to advance new spending initiatives and create a climate more conducive to Bush's calls for restructuring Social Security and Medicare.

The Financial Times of London started this ripple when it wrote recently that the most conservative Republicans would welcome a "fiscal crisis" that provides a justification for cutting spending. Liberal economist Paul Krugman then amplified the accusation in his New York Times column Tuesday.

Now some leading Democrats are joining in. Sen. Jon Corzine (D-N.J.), a former investment banker now on the Senate Budget Committee, says that while some Bush officials may have a supply-side faith that the tax cuts will pay for themselves through faster growth, he believes that "the ideologues in the administration" have a two-stage strategy: Engineer large deficits now and then use the red ink later to argue "for downsizing the role of government," particularly by retrenching Social Security and Medicare.

Not surprisingly, the Bush team denies that. One Republican strategist close to the White House says Bush believes that his tax cuts are the best way to stimulate the economy, which would increase government revenue and eventually reduce the deficit. "This is not a hidden attempt to reduce spending," says the strategist, who spoke on condition of anonymity. "It's more simple; he thinks his plan will help the economy."

This recalls the argument during Ronald Reagan's presidency when critics -- notably the late Daniel Patrick Moynihan, then a Democratic senator from New York -- charged that the administration knew all along that Reagan's 1981 supply-side tax cuts would open huge deficits. No one found a smoking gun to prove that charge, though enough conservatives defended the deficits as a way to "starve the beast" (in other words, de-fund the government) to keep the suspicion swirling.