Repeal Bush's Tax Cut:

One of the impressive feats of intellectual tenacity
in recent times is the Republicans' ability to sustain their faith in large tax
cuts for the wealthy despite repeated battering from reality.

When George W. Bush first proposed this early in 2000, his justification was
that our economy was so strong that it was producing far more revenue than we
needed. A year later, as Congress was considering his proposal, the president's
rationale did a 180-degree turn: Now it was the very weakness of the economy that
demanded a tax cut, so that the wealthy would be encouraged to engage in more of
the economic activity that was to be our means of avoiding recession. During all
of that time, Bush was as fervent as anyone else in subscribing to the view that
revenues derived from the payroll tax should go only to Social Security and not
be used for other purposes--until it became clear that he could not have both his
tax cut and this commitment, whereupon the commitment began to crumble. The
constant throughout these flip-flops, however, was the president's ardent
conviction that we had too much government. In fact, the real reason he sought a
significant reduction in government revenues was his belief that this was the most
effective way to reduce the level of government activity.

But then things changed, tragically and drastically. First, of course, it
became clear that the tax cut was doing very little to stave off economic
weakness--not surprising, since the great bulk of the reduction is not due to
take effect until years in the future, far beyond the date when the current
cyclical downturn should be history. And second, cataclysmically, America
suffered the massive, murderous tragedy of September 11.

One consequence of that horrific day is a national consensus that what we need
is more government spending--to move immediately against terrorists; to engage in
significant reconstruction, compensation, and increased security; and also to deal
with a very real recession. Fairly quickly, the pressing need to spend at least
$100 billion more than was authorized in the current budget gained near universal
acceptance. And while not everyone has been explicit about acknowledging it, the
requirement for increased government spending will not go away after we deal
with the current emergency: It will stay with us for the indefinite future. Beefing
up our intelligence capability; significantly increasing the security of air
travel; indefinitely protecting vital infrastructure; developing a public-health
capacity to deal with the possibility of chemical or biological attacks;
providing a federal role as payer of last resort for reinsurance companies in
case of similar catastrophes; significantly upgrading the computer capacity at all
levels of government; and, according to the Bush administration, greatly
increasing military spending--all of these are requirements for increased
government spending, not simply over the next six months but on into the future.

In short, the notion that government needs significant shrinkage (which was the
only consistent rationale for the Bush tax cut) no longer commands the support it
once did--even from the Bush administration. And I doubt that even the most
passionate government hater on The Wall Street Journal editorial board says
to himself on boarding an airplane that he feels much safer knowing that he has a
tax cut in his pocket.

But because Congress acquiesced to the president's tax-cut request, the
federal revenues we will need in order to deal with the current double crisis as
well as fund significantly higher levels of protective activity in the future will
not be there.

Unless we act. Federal revenues will be more than $100 billion lower than they
would have been over the next 10 years because the president persuaded Congress
to reduce the tax rate on incomes over $297,350 a year from 39.6 percent to 35
percent. That's the bad news. The good news is that only a very small piece of
this reduction has gone into effect; if Congress acts now, we can produce more
than $100 billion in additional revenue with no contractionary short-term
economic consequences.

Under current law, the $100 billion or so in additional funding that we will
spend to deal with our crises will add to the national debt unless, as
conservatives have already begun to urge, we make up for this by cutting federal
spending for education, housing, health care, and other critical social needs.
Obviously, it makes sense to spend freely now, both to combat the deepening
recession and to deal with the terrible events of September 11. But it does not
make sense to couple this short-term spending increase with a long-term
reduction in federal revenue from the very wealthiest people in our society.

On September 21, I filed a bill with a number of Democratic co-sponsors to undo
the cut in the top tax rate and to put the resultant revenues into the Social
Security and Medicare trust funds (in the same percentage as the current payroll
tax is divided). This will allow us to proceed with the increased spending that
we need in the short term without immediately cutting vital social programs or
leaving the conservatives with a larger national debt with which to argue for
such spending cuts in the future. Putting this money into the Social Security and
Medicare trust funds has two justifications: First, unlike the "lockbox"
concept--and the longer I hear that debate carried on, the more I am convinced
that if we were to make any change in the First Amendment, it should be to ban
the use of metaphors in the discussion of public policy--this produces additional
actual resources to help keep the Social Security system solvent and to provide
at least a small part of the additional funds that Medicare needs to rescue it
from its current fiscal ill health. Second, it enables my elected colleagues--both
the president and Congress--to keep the promise so many of them ardently made not
to spend payroll-tax revenues for general government purposes.

Of course, they now say, this promise must give way if there is no alternative
for protecting national security. But there is an alternative: telling the
richest people in this country that while they will still get the same tax cuts
in dollar terms on income below $300,000 that their poorer fellow citizens get,
they will not get an additional $100 billion-plus over the next 10 years.

If we hadn't already reduced the resources that the government needs by more
than $100 billion over the next decade as a gift to the very wealthy, I doubt
that we would do so in the current circumstances. Sometimes mistakes are hard to
undo. This time, correction can come easily, since tax cuts far in the future
that have not gone into effect can be undone without any destabilizing effect.

Letting a mistake stand that can easily be corrected is dumber than making it
in the first place.

You need to be logged in to comment.
(If there's one thing we know about comment trolls, it's that they're lazy)

Connect
, after login or registration your account will be connected.
Advertisement