Editorial
Was the Senate's vote to give George W. Bush only $1.2 trillion in
tax cuts a famous victory for moderation? For one thing, the battle
over the size of the tax cut is by no means over. Soon Bush will be
out there telling voters once again that it's time for the federal
government to give back its excess cash, and that he wants to give
all of us a tax break. And his handlers will try once again to create
that aura of inevitability, so that despite the qualms of moderates
the tax cut in all its $1.6 trillion glory (which is to say with its
true cost of $2.5 trillion plus) will be enacted.
Anyway, scaling down Bush's tax cut is not enough. Why? Because
Bush hasn't offered a basically reasonable plan that is a few hundred
billion dollars too big; he has offered a plan that is contrary to
the interests of the great majority of Americans, and that has been
sold under utterly false pretenses. One of these false pretenses is the claim that there is plenty of
money for tax cuts, that we can have the tax cut without endangering
other priorities. Dick Cheney knows better: He cast the deciding vote
against a Democratic amendment that would have forced the
administration to actually make room in its budget for a realistic
prescription drug program for retirees, the kind of program that Bush
promised during the campaign.
Cheney's action, in essence, freed the administration to devote so
much money to its tax cuts that it can offer that drug program only
if it raids the Medicare surplus - that is, it can provide additional
benefits to today's retirees only by diverting the payroll taxes the
baby boomers are now paying into the system, ensuring that when
today's 50-year-olds reach retirement age the trust fund will be
gone. In practice his vote probably means that the prescription drug
benefit is dead, sacrificed to the tax cut.
The point is that even though the administration has done
everything it can to hide the true budget cost of its tax plan and to
inflate estimates of the amount of money available, it still can make
the numbers add up only by abandoning every vestige of "compassion,"
including solemn promises to provide drug benefits to retirees and to
improve the lives of military families. (Mary McGrory, surveying
Bush's broken pledges to the military, calls him the "commander in
cheap.") And Bush has understated the true budget cost of his tax cut
by at least $500 billion, and overstated the amount of money
available by at least another $500 billion. Some Democrats may feel
that cutting his plans back by $400 billion is a great victory. Is
it?
The other great false pretense is that this is a tax cut for
ordinary families; again and again we hear about the "typical" family
that will receive a $1,600 cut. But the administration's own figures,
though it has tried to conceal them, show that families with incomes
of less than $30,000 will receive an average cut of $264; families
with incomes of $30,000 to $40,000 will get only $616. Do you really
think that such families need those tax cuts more than they need the
assurance that their parents can afford prescription drugs - and that
they themselves will find a still-functioning Medicare system when
they retire?
Of course, some people would benefit from the tax cut. The
accounting firm of Deloitte & Touche has calculated that an
individual with an income of $1 million would get a tax break of
$46,758 - or much more if he is in line to inherit a large estate.
The New York Times ran a story about the impact of tax cuts in
Montana, a state that went strongly for Bush. Guess what? Montana is
a poor state - which means that not many people would get that
"typical" $1,600 tax cut, and a large fraction would get nothing at
all. May I suggest to big-tax-cut Democrats like Ben Nelson of
Nebraska and John Breaux of Louisiana, senators from states not noted
as favorite haunts of multimillionaires, that they ask whether this
kind of tax cut is really in the interests of their constituents?
Bush's tax plan shouldn't be scaled back; it should be abandoned.
There's still time to craft a tax cut that the nation can really
afford, and that really helps ordinary people.
ABANDON BUSH'S TAX CUT FOR ONE THAT WORKS
PAUL KRUGMAN Syndicated columnist
04/11/2001
Seattle Post-Intelligencer
FINAL
B5
(Copyright 2001)
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