Democratic Underground

The $1.6 Trillion Pyramid
by Maren L. Hickton

The $1.6 Trillion Pyramid

This week, Bush began a sweep-states push of his tax cut plan. Just think: You, too, could be a winner. All those who want something for nothing can participate just by supporting his program. Sound too good to be true? Not really. The more of us who support it, the more likely it will get passed by Congress.

The way it works is quite simple. It's kind of like a reverse version of Robin Hood: Steal from the poor, who need social programs, and give to the rich, who can take care of themselves. In its broader unsound form, the centerpiece of Bush's budget is a 10-year oddsmaking scheme offering tax cuts based on income: the more you make, the more tax relief you get.

In fairness, Bush's Budget Director, Mitch Daniels, conceded to Fox News Sunday (2/25/01), "Odds are these (financial) projections will not be accurate; precision is tough ten years out." He went on to report that Bush's long-term plan is based on "very cautious assumptions." Assumption is a good word.

For one thing, most Americans couldn't care less about these tax cuts. They are far more interested in improving education (93%), keeping America prosperous (93%), dealing with energy problems facing the nation (86%), keeping the federal budget balanced (86%) and providing military security for the country (82%), than cutting federal income taxes (67%), according to Gallup.

The more people will save in taxes (the rich), the more likely they are to support Bush's tax cuts. An overwhelming majority of American's believe that reduced taxes "would not make much of a difference to them and their families." But they are wrong.

If these tax cuts are passed in their present form, it would be disastrous to our economy. Cuts include federal programs that make telephone service affordable to consumers in rural areas. Taxpayers do not pay to make the phone service affordable; we only pay for the administration of the program. So besides worrying about increasing energy costs, this move could financially affect many people residing in rural areas, like most of the states that elected Bush.

Cuts also include the elimination of corporate subsidies for research and investment. These subsidies come to corporations in the form of tax breaks, industrial revenue bonds, and tax increment financing designed to woo businesses to particular regions to create and increase jobs. The only problem with "corporate welfare," the "socialistic program" debate name for these subsidies, has been in the area of monitoring and accountability - a problem that is actively being addressed.

In 1995, MAPA (Minnesota Alliance for Progressive Action) won the first comprehensive subsidy disclosure law. And Good Jobs First documented that at least 36 states, 26 cities and five counties all attach job quality standards to these subsidies, which is an 11-fold increase since 1994. While Bush claims he does not want any "ornaments" on his "Christmas Tree" (budget proposal), those big corporations, who benefit from these government incentives, may be your employer who require these subsidies to continue to develop their business so that they can give you a paycheck. Jobs are the critical success factor for creating prosperity. The wealth that this country creates results from those who contribute taxes to Uncle Sam. And, as anyone would agree, job security is far more important than a tax cut: you have to have a job to get one.

Cuts also reportedly include the Export-Import Bank, which provided $12.6B in loans, guarantees and credit insurance to boost sales of US goods overseas in the last year. We are in the midst of a record trade deficit and businesses are already protesting cuts to the Bank, with good reason: If you don't export, what does that mean? You lose jobs in the United States. Again, without a job, you won't get a tax cut.

This is just the beginning of the Bush cut-list. Since he seems to be confoundedly living in the past, he understands that the reason that Reagan's tax cuts failed was due to increased government spending, so he doesn't want to make that monsterous-deficit mistake again. But not only is he ignoring what American's want, he, obviously, doesn't have a clue how important jobs are to this country.

His meeting with President Fox in Mexico, recently, included a discussion regarding making it easier for the Mexican people to cross the border and work here: cheap labor. The cost of living is significantly less in Mexico than it is in the United States. This includes allowing (unsafe vehicles and products) truckers to conduct business in this country, which has the likelihood of reducing US production and wages to many Americans living in border states. More job loss to American citizens.

Chief of Staff, Andrew Card, discussed how the President's budget will pay down the debt, "in a very, very fast way, in fact it will pay down America's debt about as much as you can possibly pay down that debt," whatever that means. If any cut involves the loss of jobs, not only will we not be able to pay down the debt, we will end up in a recession the likes of which this country has never seen, irrespective of tax cuts or other worthwhile social programs proposed by Bush.

Increasing education spending by 11%, a 5% increase in Pentagon spending, plus the reported $1 trillion that he plans to set aside for Social Security private investment accounts are all proposals that take a lot of tax money, but do not necessarily result in adding to the GDP or the creation of jobs. For example, if Bush really wants accountability in our nation's schools, can you imagine how much just the federal and state administration costs of this program will be? There won't be any money left for additional teachers.

In this Republic, like it or not, social programs are here to stay. To maintain prosperity, federally funded programs must include ones that stimulate all businesses, small businesses and big businesses alike - so that people can have jobs, so that we can all continue to pay taxes to pay down the debt, so that we can pay for increases in education spending, pentagon spending, reforms to our health care system, and Social Security, PLUS the programs that American's really want, which does not seem to include R&D funding that Bush is offering to the drug companies who financed his election.

And any American who continues to call any federal or state program "socialistic," should immediately return their Social Security check, stop accepting Medicare, home school your family, and quit paying taxes altogether.

 

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