Miller Center

American President

A Reference Resource

Domestic Affairs

When George W. Bush took the oath of office, he became the third President out of the past four who had cut his teeth in public life as a governor. True to this pedigree, the issues Bush initially focused on were domestic in nature. They ranged from cutting taxes and seeking to expand energy production to bolstering public education. In fact, he arrived in Florida on September 10, 2001, to try to draw attention to his education initiatives. The next day, September 11, President Bush was told of the planes hitting the World Trade Center while reading to students. Of course, the events of that day—and Bush's response to them—shaped every aspect of his presidency from that moment forward. But Bush pursued his domestic agenda with considerable success both before and after 9/11.

The Tax Cutter

During the 2000 election campaign, the Bush camp allowed visitors to the campaign's Internet web site to plug in their income and deductions to figure out how much they would get back from a Bush tax cut.

In September 1999, President Clinton vetoed a $792 billion tax cut over 10 years that the Republican Congress sent to him as a pre-election year ploy. Al Gore, the Democrats' nominee-in-waiting, previewed his 2000 campaign language by denouncing the GOP gambit as a "risky scheme." Clinton himself actually taunted the Republican presidential candidates—Bush included—by quipping that they could now run on a tax cut. Bush was already doing just that, and he seized the initiative on this issue by proposing a tax cut even larger than the one Clinton had vetoed.

By the summer of 2000, with the federal budget in surplus, Gore began to worry he was falling behind on this issue—and so proposed a $500 billion, 10-year tax cut of his own. Thus, even before being elected, Bush had set the agenda on this issue.

In the first week of Bush's presidency, Federal Reserve Board chairman Alan Greenspan testified that Bush's proposed tax cuts—he was now asking for a $1.6 trillion cut over 10 years - would not harm the already slowing economy, and might do some good. Democratic congressional leaders Tom Daschle and Dick Gephardt promptly announced that they'd accept a 10-year figure of up to $900 billion. Moderate Democratic senator John Breaux of Louisiana, set a ceiling of $1.25 trillion—the number that passed the Senate on Bush's 77th day in office. By then, the President had finally signaled that, he too, would compromise, and after differences were ironed out between the House and Senate versions of the legislation, Bush had wrangled out of Congress a tax cut estimated at $1.3 trillion to $1.4 trillion over 10 years. The measure, signed by Bush in the East Room on June 7, 2001, exempted millions of Americans from paying any taxes, created a new 10 percent bracket for the working poor, while lowering the top three brackets as well: by 2006, the top tax rate was to decline from 39.6 percent to 35 percent; the 36 percent rate to 33 percent, and the 28 percent rate to 25 percent.

"A year ago, tax relief was said to be a political impossibility. Six months ago, it was supposed to be a political liability. Today, it becomes reality," Bush said at the bill signing ceremony. "This tax relief plan is principled. We cut taxes for every income taxpayer. We target nobody in, we target nobody out. And tax relief is now on the way."

Indeed, as he spoke, $300 and $600 rebate checks were being prepared for mailing to American taxpayers. This idea originated, ironically, with Representative Bernie Sanders of Vermont, the only Socialist in Congress. But amid Bush's euphoria, nay-sayers warned of potential land mines buried in the legislation. One was that if the economy were to slow down further, the effects on the federal deficit could be explosive. The second was that the most politically popular portions of the bill—ending the so-called marriage penalty, phasing out inheritance taxes, and doubling the child credit—were not phased in for years under the legislation—and that there would be political pressure to expedite them, adding even more to the deficit.

"I think this is kind of a tax-cut time bomb," Bruce Bartlett, an economist for the National Center for Policy Analysis, noted when the bill passed. "No matter what happens in the 2004 elections, there probably has to be another tax cut in 2005."

Bartlett proved prophetic—although Bush did not even wait that long to propose—and sign—legislation escalating the speed with which the cuts were to take effect. For his part, the President insisted that his tax cuts had shortened the recession he inherited in both duration and depth. Many economists agreed, but they also noted that the deficits the Bush administration were running in 2004 were the largest in history—with no end in sight.

No Child Left Behind Act

In time, this piece of legislation would be disparaged so successfully by the National Education Association, which was always skeptical of it, that most of the Democrats running for President in 2004 would routinely allude to it negatively in their standard stump speech. But its history serves mainly as a cautionary tale about the difficulty of effecting change in Washington. When No Child Left Behind passed, it had as much bipartisan support as any major legislation in many years. Moreover, both the machinery and objective of this program were borrowed from President Clinton, who aggressively promoted his version of school accountability ("Goals 2000") for eight years, and who devoted much of his 1999 State of the Union Address to explaining why it was important to keep the momentum on education reform moving forward.

In his inauguration address, Bush said that in accepting low scholastic achievement by minority students as the norm, the United States was engaging in the "the soft bigotry of low expectations." Bush's version of a plan to address this condition passed the House on a vote of 381-41; the Senate approved it 87-10. The President signed the bill on January 8, 2002, while sitting at a school desk in Hamilton, Ohio. The legislation mandates student testing and ties federal funding to the results; low performing schools won't have their funding withdrawn, but must take concrete steps to improve. From the start, however, Democrats expressed concerns that not enough money was being appropriated for what Bush was trying to accomplish.

In early March of 2002, Senator Edward M. Kennedy, a Massachusetts Democrat who'd shepherded the bill through the Senate and appeared in public with Bush to promote it, broke with the White House over funding. Kennedy called the administration's budget requests for education "a severe blow to our nation's schools"—and less than the administration had promised. "It's time for the administration to match its rhetoric with real resources," Kennedy added.

In time, this refrain became a rallying cry for the Democrats and for the teachers' unions, and was echoed by big-city school districts whose finances had suffered from a downturn in their local economies. By the 2004 campaign, John Kerry was offering the No Child Left Behind Act as an example not of bold reform but of a broken promise from a President who "is misleading the American people." Bush, in his final debate with Kerry, countered that he had increased Department of Education spending some 49 percent. In fact, the President was understating the case. The true figure was closer to 60 percent.

This pattern of "point-counterpoint" became a feature of Washington politics. Bush would work an issue, get bi-partisan support, then watch as Democrats—even those who'd voted for the legislation—refused to give him any credit, and indeed, criticized the legislation bitterly. It happened on No Child Left Behind, the Patriot Act, and a broad-based reform of Medicare that included the first-ever drug benefit for seniors. In the Bush White House, the Democrats' change of heart on these issues was evidence that the Democratic Party is too easily whipsawed by powerful liberal special interest groups. Democrats viewed it differently. To them, Bush's conciliatory rhetoric and bipartisan legislation were undermined by an unwillingness on his party to fund his own programs sufficiently, and by an incompetent execution of his own policies. And they didn't limit this criticism of the President to domestic policy.