Everybody wants a movement towards a truly balanced budget.
But the question becomes: Are we going to have a tax hike to go with it? There’s little doubt that Bush will put on his Grover Cleveland hat and veto any tax hike proposal that comes across his desk.
If we can get some serious spending limitation from Democrats and Republicans - without any tax increases - the stock market will celebrate.
The bottom line here? President Bush’s team must develop a spending limitation pay-go proposal to preempt a Democratic revenue pay-go. Spending increases must be offset with spending cuts—not tax hikes.
Between 1995 and 1998, during the high tide of their limited government period, Gingrich & Co. effectively used a spending limit pay-go. Using such an approach will head off any potential revenue pay-go advocated by Pelosi, Spratt, Rangel and others that would lead to tax hikes.
Conservative blue dog Democrats—whose ranks grew larger this past Tuesday—understand all this. They grasp the pro-growth message for the most part. Blue dogs are business friendly and understand the need for lower spending, lower taxes, and less onerous regulation like Sarbanes-Oxley.
The blue dog bark will be heard in this Congress. Their group boasts 44 fiscally conservative members, enough to truly affect the balance in Washington. They may have what it takes to get us to a balanced budget with a spending limitation without raising taxes.
Look no further than two of our guests on Kudlow & Company last night. Former NFL quarterback, newly minted Congressman Heath Schuler (NC), and Dennis Cardoza (CA), co-chair of the Blue Dog Coalition, are both pro-business Democrats. They don’t want tax hikes. These guys are not your typical tax-hiking Dems by any stretch of the imagination.
And if Rep. Mike Pence (R-IN) gets the nod as House Republican leader (as he should, and likely will), he will no doubt work closely with these guys to usher in true spending reform.
What’s more, if my recent interview with future House Speaker Pelosi is any indication, she will be leading the charge toward fiscal responsibility. (Knock on wood that Mrs. Pelosi can steer clear of raising taxes in the process.)
I still think we are in a Goldilocks, soft-landing economy. And I think this stock market still has legs. Tuesday's election results may end up being a very good thing for both.
Oh, one last thing: I still believe it's the greatest story never told.