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Stephen D. Landfield



The Bush Economic Plan: Robin Hood in Reverse
 by Stephen D. Landfield
In a reverse of the old Robin Hood tale, President Bush has once again managed to show how Republicans take from the poor and give to the rich. Either that, or Santa Claus came two weeks late this year to the investor class.

Last week, Bush announced a sweeping 10-year, $674 billion tax cut plan. There is only one problem—it doesn’t stimulate the economy. Although cloaked as an economic stimulus package, it doesn’t create jobs and it does little to jump-start the sluggish economy. It is Santa’s bag of goodies for the wealthy, at the expense of the middle and lower classes.

According to Citizens for Tax Justice, the wealthiest 1% of taxpayers—those making over $350,000 per year—will get almost 50% of the benefit from the Bush plan. On the other hand, the 80% of American households making $73,000 per year or less will benefit from under 10% of the tax breaks Bush proposed. This plan is analogous to a giant feast…but most of us were not invited to partake in the meal. Sure, the President can claim we all get something. But the reality is, under the Bush plan, we the peasants get thrown the bones after the noblemen are finished eating.

As Senator Tom Daschle concluded, “It is the wrong idea, at the wrong time, to help the wrong people.”

I am not foolish enough to suggest that the Democratic Party will gain sympathy and support from the American public—after a disastrous election year—by opposing tax cuts. I understand that Bush does not want to sit idly by and watch the same thing happen to him that happened to his father in 1992. A popular president defeated by a poor economy. This is really all about 2004. But it is also something even more troubling. It is a return to the failed concept of trickle down economics. The theory that states that if Congress gives investors tax relief, the benefits, like a convoluted Rube Goldberg cartoon, will eventually trickle down and benefit the rest of us. But that is simply not the best way to jump-start the economy. There is no guarantee that the wealthy will use that money in a way which benefits anyone other than themselves. The rich utilize tax shelters and offshore investments to avoid taxation. We have heard the tales of how wealthy people and some corporations pay no taxes at all. And, just how many cars and vacation homes can Bill Gates possibly need? In a few years, the benefit may actually “trickle down.” But not right now. Most of the Bush tax plan does not even kick in until 2004. How does that help the stagnant economy right now?

On the other hand, if you really want to inject a benefit into the economy, give the money to the middle and working classes. They will go out and spend it on consumer goods. They will buy clothes, appliances and cars. Voila. Instant creation of demand, instant need for manufacturing consumer goods, instant expansion of the economy.

The problem with the American economy is too much capacity and too much unemployment. Factories sit idle and people need jobs. There aren’t enough buyers for the goods and services we can produce. That is where we must target the solution.

So, as a matter of fairness, Democrats must stand up and oppose a fiscally irresponsible and socially stratifying tax proposal. And, the signs are the American public understands this.

A CBS News Poll released this week found that most Americans think that Congress should first help the ailing economy and not necessarily push a tax cut. Only 41% of those polled believe the economy is in good shape. For most Americans, taxes are a lower priority than other domestic issues like dealing with unemployment and health care reform. Not surprisingly, 6 out of 10 Americans believe that Administration policies favor the rich and not the middle class and that it is unlikely that Congress will do anything from which they will ultimately benefit.

It cynically appears that the President has therefore met most Americans low expectations of the fairness and equity of his tax plan. When challenged, Bush then hides behind his dogmatic ideas by accusing his opponents of engaging in class warfare when it is actually his very plan that earns him a place in history as “The Great Stratifier.”

The centerpiece of the Bush plan is the elimination of the tax on corporate dividends. An expensive proposal which really does nothing to immediately benefit the economy and which really will have only nominal impact on most of us, whose 401-K plans and IRA’s are already protected from such taxation. Eighty-five percent of stocks and bonds are owned by the top 10% of Americans. How will that create even one new job?

Finally, there is the issue of the impact of a nearly $700 billion plan on the creation of ballooning deficits which are already at $145 billion in 2003, the cost of fighting terrorism, and the possibility of waking up one morning and finding that we are at war with Iraq at a cost of $100 billion. We cannot have it all. The Bush plan contains no job creation proposals, no investment in our nation’s infrastructure, and does nothing to aid cash strapped states—like New Jersey—which will either have to cut essential services or themselves raise taxes to make ends meet.

What this country needs is tax relief, on a more modest scale, aimed at the middle and working class—the ones who really need it. Payroll tax holidays and reductions and a restructuring of tax rates to benefit the lower tax brackets would help allow the American dream to also “trickle down.”

January 11, 2003

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