Howie Luvzus

As a Supply-Side Conservative, on the surface I understand Bush’s reasoning for vetoing the legislation. It seems to make sense that if you believe in lower taxes as a spur to the economy, then you should support lower taxes across the board (and despite the lack of media attention, the Bush tax cuts have spurred the economy - raising the unemployment rate to full employment numbers and lowering the national debt considerable further than projected over the past year by upping the tax take across the board).

But, lest you quit reading and think me a Bushie, let me clearly state that I disagree with his use of that reasoning in this case. I don’t think all tax cuts and tax increases are created equal (no supply-siders do). I do not like to speculate about why legislators do what they do (like are they “bought” by a particular lobby or are they arrogant or are they just stupid), so I am not going to do that in this case either. However, for whatever reasoning he has for this veto, his use of a supply-side defense just doesn’t work in this case.

First, for a true supply-side defense, it must be shown that not increasing a tax will drive business. But we’ve seen repeatedly that taxing cigarettes makes little less than a dent in the smoking stats. And although it is likely to be a regressive tax (having a greater impact on the poor than the rich, which is not nearly as publicized as it should be any time tax increases get spoken about), it makes sense, especially if the poor are those who will benefit most from such a tax, which is clearly the case here.

Second, a supply-side defense must show that taxing will be detrimental to the overall market, which it clearly will not be in this case. As I said before, taxes make very little difference in the number of smokers or in the profits of the tobacco companies. If anything, this tax would benefit the economy because it would extract more money out of the pockets of a group in this country heavily responsible for rising health costs - smokers! And it will put more money toward other businesses like health care and education. And the payoff in the end will hopefully be less future smokers with a lessening effect on future healthcare costs!

So, I think Bush is wrong - dead wrong! Not from simply a moralistic standpoint, but from a supply-side economic standpoint. I don’t know which of his aides recommended such a veto, but likely they should be fired (because we all know Presidents don’t act unilaterally - no matter what we think about them personally). This veto is a not only a moral travesty, but an insult to true supply-siders (it makes supply-siders like myself look like we are idiots and more dedicated to cutting taxes than to legitimate uses of taxing).