K
Kickin' Ass and Takin' Names
Guest
Taxing to the dark side
Bush misleads Americans about tax cuts -- again -- during the State of
the Union.
By Daniel Gross
Slate
January 29, 2008
IT MADE SENSE for George Bush to lead with the economy in last night's
State of the Union address. We're perched on the edge of a possible
recession for the first time since 2001. And he has always used the
SOTU to mobilize the nation to deal with a crisis. Given that Bush has
generally had his way entirely when it comes to fiscal matters --
massive tax cuts, massive spending increases, and the new Medicare
prescription-drug benefit -- this last State of the Union could have
been a valedictory, in which he rehashed highlights and urgently
argued for a legacy.
But the speech, subdued and generally lacking passion, was no
valedictory. Nor did he muster much energy and eloquence to deal with
the current economic woes. Rather than build a narrative, as he did in
the past when discussing national security challenges, Bush simply
ticked off the items on the economic agenda that have consumed so much
energy and time -- stimulus, subprime, health care, etc. There was no
high-minded talk of the ownership society, or an investor nation.
Tax Fantasy
The only legacy moment came when he discussed his desire to make
permanent the temporary tax cuts enacted in the first term. Not
surprisingly, it rang a bit hollow. He told Congress that making the
tax cuts, due to expire in 2010, permanent today would go a long way
toward soothing frayed economic nerves. "With all the other pressures
on their finances, American families should not have to worry about
the federal government taking a bigger bite out of their paychecks.
There is only one way to eliminate this uncertainty: Make the tax
relief permanent."
This is, of course, a fantasy confined to a dwindling number of office
suites in the White House, the Wall Street Journal editorial page, and
certain time slots on CNBC. On the long and growing list of factors
weighing on the economy -- stagnant job growth, the housing mess,
problems with bond insurers, the self-inflicted wounds of the
financial sector, a debased currency -- the prospect that tax rates are
going to revert to 1990s levels in three years is pretty far down.
Profligate Fiscal Behavior
What's more, neither Bush nor any of the Republican candidates angling
to replace him will acknowledge the fact that Bush's tax cuts can't be
saved because of Bush's legacy of profligate fiscal behavior. The
combination of the tax cuts and massive spending on education, health
care, and war has pushed the national debt from $5.67 trillion in the
fall of 2000 to $9.17 trillion today, an increase of 61 percent.
Rather than seriously try to deal with entitlements, he created a
massive new one--and then told Democrats that the only real solution to
the entitlement mess was to rip up Social Security. The annual
deficit, under superficial control only because his administration and
Congress spent hundreds of billions of dollars of excess Social
Security payroll taxes, is poised to rise again this year -- and in the
years to come. The Congressional Budget Office last week projected
that the fiscal 2008 deficit will rise 34 percent from fiscal 2007.
Factor in $30 billion in spending on Iraq and Afghanistan, and the
increase is likely to be greater than 50 percent.
Fundamental Dishonesty
Rather than reveal any sense of realism about the implications of this
decade's tax-and-spend policies, Bush reverted to the fundamental
dishonesty that has characterized his discussion of the tax cuts right
from the beginning. (Go read Paul Krugman's 2001 pamphlet Fuzzy Math
again.) To those who would argue for letting the tax cuts expire, he
said: "Try explaining that to 116 million American taxpayers who will
see their taxes rise by an average of $1,800."
Sigh. The use of the average here in this regard is astonishingly
misleading, because the distribution of incomes has been so wildly
unequal during the Bush Boom. The median -- or typical -- taxpayer will
suffer nothing close to $1,800 in higher taxes when they expire. As
David Cay Johnston noted in the New York Times, "The top 1 percent
paid 27.6 percent of all federal taxes in 2005," and they'll be
disproportionately impacted when the tax cuts expire.
A study by Citizens for Tax Justice noted that the top 0.6 percent of
tax filers, those with more than $500,000 in income, received nearly
three-quarters of the benefits of the capital gains and dividend tax
cuts in 2005. It would have been far more accurate for Bush to note
that the few Americans who received the overwhelming majority of the
benefits of the tax cuts (and who saw their incomes soar) will face a
sharply higher bill, while the overwhelming majority who received
relatively small benefits (and saw their incomes stagnate) will feel a
smaller pinch.
Checks and Money Orders
There was one moment when the old, ****y Bush made an appearance.
"Others have said they would personally be happy to pay higher taxes,"
he said, his eyes twinkling mischievously. "I welcome their
enthusiasm. I am pleased to report that the IRS accepts both checks
and money orders." Get it?
Much has been made of how the repeated failures of his presidency seem
not to have taken much of a personal toll on Bush. But on taxes, it's
likely he will ultimately feel a personal impact. During the years of
low marginal tax rates, Bush was on the public payroll, holding the
relatively low-paying job of president. Come next year, as he told
author Robert Draper, he's going to start to "replenish the ol'
coffers" by giving speeches and likely writing a memoir -- just in time
to pay higher taxes.
2008 Washington Post, Newsweek Interactive Co. LLC
http://www.slate.com:80/id/2183034/
Bush misleads Americans about tax cuts -- again -- during the State of
the Union.
By Daniel Gross
Slate
January 29, 2008
IT MADE SENSE for George Bush to lead with the economy in last night's
State of the Union address. We're perched on the edge of a possible
recession for the first time since 2001. And he has always used the
SOTU to mobilize the nation to deal with a crisis. Given that Bush has
generally had his way entirely when it comes to fiscal matters --
massive tax cuts, massive spending increases, and the new Medicare
prescription-drug benefit -- this last State of the Union could have
been a valedictory, in which he rehashed highlights and urgently
argued for a legacy.
But the speech, subdued and generally lacking passion, was no
valedictory. Nor did he muster much energy and eloquence to deal with
the current economic woes. Rather than build a narrative, as he did in
the past when discussing national security challenges, Bush simply
ticked off the items on the economic agenda that have consumed so much
energy and time -- stimulus, subprime, health care, etc. There was no
high-minded talk of the ownership society, or an investor nation.
Tax Fantasy
The only legacy moment came when he discussed his desire to make
permanent the temporary tax cuts enacted in the first term. Not
surprisingly, it rang a bit hollow. He told Congress that making the
tax cuts, due to expire in 2010, permanent today would go a long way
toward soothing frayed economic nerves. "With all the other pressures
on their finances, American families should not have to worry about
the federal government taking a bigger bite out of their paychecks.
There is only one way to eliminate this uncertainty: Make the tax
relief permanent."
This is, of course, a fantasy confined to a dwindling number of office
suites in the White House, the Wall Street Journal editorial page, and
certain time slots on CNBC. On the long and growing list of factors
weighing on the economy -- stagnant job growth, the housing mess,
problems with bond insurers, the self-inflicted wounds of the
financial sector, a debased currency -- the prospect that tax rates are
going to revert to 1990s levels in three years is pretty far down.
Profligate Fiscal Behavior
What's more, neither Bush nor any of the Republican candidates angling
to replace him will acknowledge the fact that Bush's tax cuts can't be
saved because of Bush's legacy of profligate fiscal behavior. The
combination of the tax cuts and massive spending on education, health
care, and war has pushed the national debt from $5.67 trillion in the
fall of 2000 to $9.17 trillion today, an increase of 61 percent.
Rather than seriously try to deal with entitlements, he created a
massive new one--and then told Democrats that the only real solution to
the entitlement mess was to rip up Social Security. The annual
deficit, under superficial control only because his administration and
Congress spent hundreds of billions of dollars of excess Social
Security payroll taxes, is poised to rise again this year -- and in the
years to come. The Congressional Budget Office last week projected
that the fiscal 2008 deficit will rise 34 percent from fiscal 2007.
Factor in $30 billion in spending on Iraq and Afghanistan, and the
increase is likely to be greater than 50 percent.
Fundamental Dishonesty
Rather than reveal any sense of realism about the implications of this
decade's tax-and-spend policies, Bush reverted to the fundamental
dishonesty that has characterized his discussion of the tax cuts right
from the beginning. (Go read Paul Krugman's 2001 pamphlet Fuzzy Math
again.) To those who would argue for letting the tax cuts expire, he
said: "Try explaining that to 116 million American taxpayers who will
see their taxes rise by an average of $1,800."
Sigh. The use of the average here in this regard is astonishingly
misleading, because the distribution of incomes has been so wildly
unequal during the Bush Boom. The median -- or typical -- taxpayer will
suffer nothing close to $1,800 in higher taxes when they expire. As
David Cay Johnston noted in the New York Times, "The top 1 percent
paid 27.6 percent of all federal taxes in 2005," and they'll be
disproportionately impacted when the tax cuts expire.
A study by Citizens for Tax Justice noted that the top 0.6 percent of
tax filers, those with more than $500,000 in income, received nearly
three-quarters of the benefits of the capital gains and dividend tax
cuts in 2005. It would have been far more accurate for Bush to note
that the few Americans who received the overwhelming majority of the
benefits of the tax cuts (and who saw their incomes soar) will face a
sharply higher bill, while the overwhelming majority who received
relatively small benefits (and saw their incomes stagnate) will feel a
smaller pinch.
Checks and Money Orders
There was one moment when the old, ****y Bush made an appearance.
"Others have said they would personally be happy to pay higher taxes,"
he said, his eyes twinkling mischievously. "I welcome their
enthusiasm. I am pleased to report that the IRS accepts both checks
and money orders." Get it?
Much has been made of how the repeated failures of his presidency seem
not to have taken much of a personal toll on Bush. But on taxes, it's
likely he will ultimately feel a personal impact. During the years of
low marginal tax rates, Bush was on the public payroll, holding the
relatively low-paying job of president. Come next year, as he told
author Robert Draper, he's going to start to "replenish the ol'
coffers" by giving speeches and likely writing a memoir -- just in time
to pay higher taxes.
2008 Washington Post, Newsweek Interactive Co. LLC
http://www.slate.com:80/id/2183034/
