|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
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
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
Practical Politics website