How much does the White House stand to save from Bush's tax cut?
An activist think tank is fighting the right at the ballot box--and winning.
If all goes as the GOP has planned, George W. Bush will have on his desk by Memorial Day a $1.35 trillion tax bill that is wrongheaded and an utterly inequitable pander to the privileged. Every American should be clear about what this bill is: a blueprint that will define the political and social landscape we live in for decades to come. The immense tax cuts will not only disproportionately benefit the wealthy and increase the widening gap between rich and poor, they will also severely circumscribe the government's capacity to help improve the lives of all Americans. (As if to prove the point, the Senate Finance Committee voted out this tax giveaway the same day the Senate voted against increased funding for teachers to help reduce class size.) This downsizing--indeed, emaciation--of government is of course exactly what the right is aiming for. Grover Norquist, "field marshal" of the Bush tax plan, was quoted recently in these pages saying that his goal is "to cut government in half...to get it down to the size where we can drown it in the bathtub."
Under the plan, the 400 richest multimillionaires will receive tax breaks worth an average of $1 million a year. The poorest working families will get zip, even as the nation faces a growing investment deficit measured in children without healthcare, families without housing, overcrowded airports and neglected alternative energy and conservation. Senate "moderates" claim they improved the bill, which is true. Under the original Bush plan, 26 million children in low- and moderate-income families would get no benefit from the tax plan. Under the modified bill, that drops to 10.6 million. The $58 billion a year handed to the wealthiest 1 percent could be used to lift another 2 million children out of poverty, provide health insurance to 5.1 million uninsured children, fund universal preschool and expand childcare services to more than 9 million children--two-thirds of those eligible.
Besides being unfair, the bill, which stretches the cuts over eleven years rather than Bush's original ten, is dishonest--in reality a stealth raid on the Treasury. The Senate earlier voted to cut the Bush tax plan by 25 percent. To meet this, the Finance Committee simply backloaded the bill even more than originally planned--phasing in the full tax cuts later so they don't count under the ten-year limit used to estimate its costs. The $1.35 trillion giveaway balloons to $4.2 trillion in the next decade, after all the provisions kick in. It also calls for ending popular tax breaks in a few years--like the tax credit for research and development--in the confidence that no future Congress would choose to do so. Plus the bill is designed so that 40 million taxpayers will eventually be subject to the Alternative Minimum Tax, insuring changes that will add dramatically to the total cost. And the Republican Congress is just warming up: Even now the K Street lobbyists are cooking up ways to lard a minimum-wage-increase bill with fat corporate tax cuts.
Bush has peddled this tax cut as the elixir for a good economy and a bad one, for rising gas prices and declining stock prices, for small businesses and waitress moms. The repeal of the estate tax is shamelessly presented as a way to save family farmers, even though advocates cannot locate one farm that has actually been lost because of the tax. It's all hype, lies and distortion.
Remember--in 2002 and beyond--those responsible, from Bush to the Republican majority that marched lockstep in support, to the handful of Democratic renegades who provided the margin. They must be held accountable for this travesty.
Toward a North American economic community.
In Canada, Maude Barlow gave a stirring speech criticizing the free-trade agenda of the Summit of the Americas.
He's an archconservative who thinks big and knows how to get things done.
With NAFTA as an ugly precedent, the proposed trade pact is generating serious opposition from a number of social and economic sources.
A campaign to help sick people in need of unaffordable medicines is clashing with forces in the global pharmaceutical industry.
In one of the most foolish and cruelly ironic urban public policy decisions in recent memory, New York Governor George Pataki and New York City Mayor Rudolph Giuliani are planning to shower a series of subsidies, expected to total more than $1 billion, on the high citadel of self-styled free-market global capitalism, the New York Stock Exchange.
In December the city entered into a letter of intent to assist the NYSE in constructing a new trading floor. The arrangement commits the city to acquire land for the new exchange building, and for the city and state to construct a new trading floor for the NYSE and to grant it tax and subsidized energy benefits. In exchange, the taxpayers receive $10 million in annual rent, which will never come close to reimbursing the city and state for their costs.
The sole purported rationale for this corporate welfare bonanza is to retain the NYSE in New York City. If one were to credit this claim, the gift of more than $1 billion for the purpose of retaining fewer than 6,000 jobs--while not even ostensibly creating new ones--would, even by the corrupt standards of job-retention- blackmail deals between corporations and politicians, set a high-water mark for casuistry. However, the deal is even worse than that description suggests. There is no chance that the stock exchange would leave New York City. When I went on the NYSE floor last year and asked veteran traders about the possibility of the exchange moving to New Jersey, they laughed as they dismissed it out of hand. In addition to the institutional identity and reputation of the stock exchange, its personal connections to Wall Street firms--committed to New York City by history, by the Manhattan residences of many of their principals and employees and by long-term office rental commitments, increasingly sealed by yet other city subsidies--preclude the possibility of a move across the Hudson to become the Hoboken Stock Exchange.
NYSE's New Jersey ploy is nothing more than a ruse for covering public officials using what Justice Louis Brandeis once called "other people's money." As is typical of such arrangements, the corporate-politician conspiracy to ramrod the deal is shrouded in secrecy and in contempt for democratic processes. The city refuses to make available to the public a copy of the letter of intent it signed with the NYSE to proceed with the deal. The architectural plans for the building complex--expected by preservation advocates to generate outrage--remain concealed. The governor forced legislation authorizing the deal to go forward on a super-expedited basis, leaving legislators virtually no time to review the bill. They proceeded to pass it unanimously. New York City Council members also have failed to object to the bill.
The Fourth Estate, perhaps inured to the issue by the steady drumbeat of announcements regarding New York City taxpayer subsidies for big business, has done a less than stellar job covering this boondoggle. The New York Times editorial page endorsed the scheme years ago, when it was first being floated. Recognizing "why some oppose on principle any concession to the blackmailing tactics of businesses that threaten to move unless they get public assistance," the Times concluded that New York had no choice but to succumb. "If New York City refuses to play this game, other, hungrier cities and states will take advantage of that passivity." Apparently, the corporate executives at The New York Times Co. found this argument persuasive. In February the Times and New York City completed their own corporate welfare deal--giving the Times $29 million in tax breaks and other incentives to maintain its offices in Times Square.
It would be hard to script a more brazen and shameless corporate giveaway than a billion-dollar donation to the emblem of global capitalism from a city where nearly one in three children lives in poverty, and public investment necessities go begging. But the final act of the NYSE drama has yet to play out: There is still time for the citizens of New York, and at least one of the candidates seeking to replace Giuliani when his term expires at the end of this year, to demand cancellation of this corrupt deal.
Resident Bush's budget brandishes the camouflaged conservatism that is the hallmark of this disingenuous Administration. It advertises a 4 percent increase in discretionary spending that's in reality virtually a freeze, after taking into account inflation and population growth. Since spending on the military is going up, the amount actually committed to domestic programs is cut by 4.7 percent in real per capita terms. Bush boasts an 11 percent increase in education funding, but much of that simply counts money committed in last year's budget. And the increase is offset by deep cuts in expenditures for job training and displaced workers, even as the economy slows.
Much of the budget is fraudulent, knowingly so. Spending must be squelched to afford Bush's tax cut while paying down the debt. But the President isn't serious about cutting popular programs. So he calls for deep cuts in farm programs, which he knows Republican senators will block. He ends subsidies to US shipbuilders, which he knows Senate majority leader Trent Lott will reverse. Otherwise, the largest losers are environmental, renewable energy and energy conservation programs. Bush's answer to the energy crisis is to drill on every jot of federal land that might hold oil. His prescription for those concerned about global warming is presumably a little more arsenic in their water. The real military budget remains a mystery, awaiting the Defense Secretary's "strategic review." Yet, even the defense marker used in the current budget returns the military to its cold war average.
Democrats and moderate Republicans are boasting that they've already abandoned the Bush budget and are falsely declaring victory because they knocked a quarter off his tax cut. Congress will surely add money to education, restore funds to children's health and disability programs, and protect farmers (read, agribusiness). And it is likely to double the funds Bush earmarks for a prescription drug benefit in Medicare. We will witness a furious debate over these numbers, with Democrats and moderate Republicans in the Senate facing off against the remorseless Tom DeLay and his conservative majority in the House.
Lost in this scrapping is any mention of the real opportunities facing the nation. Years of economic growth have generated potential government surpluses--$5.6 trillion at the most recent estimate. Now, with the economy slowing, we have the chance to invest in making the country better and help jump-start the economy at the same time. Bush's most disingenuous claim is that his budget "takes care of our needs." In reality, it merely assumes that all needs are met and projects a continued decline in federal domestic discretionary programs to their lowest levels as a percentage of GDP in history.
Instead, we could truly address the disgraceful truth that in this rich nation one in six children is raised in poverty and deprived of the healthy, fair start vital to equal opportunity. Now we have the resources to rebuild an aging and overburdened infrastructure--witnessed daily in the power blackouts, collapsing sewers and aged water systems, overburdened airports, deferred toxic waste cleanups. Now we can redress the growing shortage of affordable housing and insure that every American has access to healthcare. We could even meet the international standard for foreign assistance and lead the world in providing real debt relief for the poor nations and in launching a humane response to the AIDS pandemic. All these are within reach--but are ruled out by a bipartisan consensus that more than half the surplus ($3 trillion over ten years) must be used for debt reduction in the name of "saving" Social Security and Medicare. Bush would consume the rest of the projected surplus (if not more) with his tax cuts, about 40 percent of which will go to the millionaires in the richest 1 percent of the nation. Democrats seem ready to declare victory if they can trim Bush's ten-year tax cut by 25 percent and spend the savings primarily on a prescription drug benefit.
We are about to witness a debate about priorities in Washington. But none of the alternatives debated will address our challenges or our opportunities. If progressives in the Democratic Party are to serve any function, it's time for them to find their voice.