President Bush's economics speech today was a revealing bit of political theater. My quick reaction:
1) Bush urged the Democratic-controlled Congress to extend his 2001 and 2003 tax cuts. There's no chance that will happen this session. Now what is interesting is that Barack Obama has already pledged to keep most of the cuts. But despite that, I think John McCain and congressional Republicans will hammer Obama and congressional Democrats on this issue. Fair's fair. Democrats, after all, pound Republicans when they suggest reforming Social Security, even though they always exempt current recipients and folks nearing retirement age from any changes. Also, a weak economy in the fall could make the idea of higher taxes repellent to voters. Remember, the economy was in full recovery mode when Bill Clinton pushed higher taxes in 1992 and 1993.
2) This was an opportunity for Bush to bash congressional proponents of cap-and-trade climate plans, like the Warner-Lieberman bill. But he really mentioned it only in passing:
Today the Senate is debating a bill called the Warner-Lieberman bill, which would impose roughly $6 trillion of new costs on the American economy. There's a much better way to address the environment than imposing these costs on the job creators, which will ultimately have to be borne by American consumers. And I urge the Congress to be very careful about running up enormous costs for future generations of Americans.
The problem, of course, is that McCain, his party's presidential nominee, supports the same approach. There really is an opportunity for some candidate to make the case that he wants to lower the cost of living for Americans. Cap-and-trade will raise energy costs for Americans already shell shocked by higher gas prices. One way to offset those costs is by using the proceeds from emission permit auctions to cut taxes.