"For lower-income families, my tax plan restores basic fairness," President
George W. Bush asserted in his address to Congress on February 27. "People with
the smallest incomes will get the highest percentage of reductions."
To help us understand what the president meant, here's some interesting data
from The Washington Post business section of March 13. What follows are
captions that ran under photos of the CEOs of Apple Computer and of IBM.
Apple chief executive Steven P. Jobs received options to purchase 20
million shares of the company's common stock at an exercise price of $43.59,
according to a filing with the Securities and Exchange Commission. If the
company's stock grows at an annual rate of 5 percent, the executive's options
will be worth $548.3 million on January 12, 2020. Jobs's bonus for fiscal 2000,
ended September 30, totaled $90 million, according to the filing.
The Bush tax cut on Jobs's $90-million bonus would amount to $5.1 million.
The tax cut on Jobs's $548 million in options would come out to $31.3 million.
That amounts to only a 17 percent reduction from what Jobs would otherwise pay.
International Business Machines gave chief executive Louis Gerstner
an $8 million bonus last year on top of his $2 million salary, according to a
proxy statement. Gerstner, 59, was also granted options on 650,000 shares of
stock. The potential value of the options, assuming 5 percent annual
appreciation, is $44.8 million, the proxy said.
The Bush tax cut on Gerstner's salary and bonus: $561,000. On Gerstner's options:
$2.5 million. (These are also 17 percent reductions.)
In contrast, as Bush emphasizes, take a single mother with two kids making
$22,000 a year as a waitress. Under current law, she gets a federal-income-tax
rebate of $1,974. Under the phased-in Bush plan, her rebate in 2006 would be
$2,132, up by $158.
Mathematicians would have trouble computing a percentage tax cut here, but
according to the "Bush Tax Calculator," it means a "100 percent reduction." And
that proves, says our president, that the waitress's $158 is really a lot more
than the millions of dollars that Jobs and Gerstner stand to gain from Bush's
Pants on Fire
Bush doesn't restrict his misinformation campaign to tax policy. Lately he's
been claiming that the Social Security trust fund earns only 2 percent annual
interest--despite the fact that the actual interest rate, which is based on an
enhanced version of Treasury bond yields, is higher than that (it has averaged
6.7 percent in recent years).
The prez gets his silly 2 percent figure from Cato, Heritage, and other
conservative think tanks that slightly more carefully, if still disingenuously,
maintain that 2 percent is the "rate of return on payroll taxes." This canard
ignores, among many other things, the fact that most Social Security taxes go
right out the door to pay benefits. Thus, it's the equivalent of complaining that
your $20,000, 4 percent savings account only paid 1 percent interest last year
because you withdrew $15,000 to buy a car.
But the conscience-free Dubya is wowing his audiences with his distortion of the
distortion, as in these recent remarks at a North Dakota "welcome event."
Bush: And by the way, down the road, we're going to be thinking
differently about Social Security. You see, the Social Security trust now only
earns 2 percent on your money.
Where's the Binge?
"Last year, government spending shot up 8 percent," the liar-in-chief told the
nation in February. "That's far more than our economy grew." Still another reason
to cut taxes, he argued, before Congress can blow even more of our money.
Bush's claim that the government has been on a "spending binge" is received
wisdom among right-wingers, and it has been widely accepted by the media. But
Total federal outlays grew by 5 percent last year, compared with GDP growth of
7.8 percent. This year, outlays are expected to rise by 3.6 percent, compared
with economic growth of 5 percent. In fact, in every year since the first Bush
administration, outlays have grown more slowly than the economy has. That is why
federal spending has fallen from 22.2 percent of the GDP in fiscal 1992 to only
18 percent this year. Some binge!
Apparently, the president imagines that "government spending" entails only
domestic appropriations--which are about a sixth of total federal outlays.
Domestic appropriations did grow by 7.4 percent last year (a little less than the
economy grew) and are expected to grow by 7.5 percent this year (noticeably more
than expected economic growth). But this recent upward blip merely reflects
pent-up public demand for services after the low growth in domestic
appropriations over the previous four years--which averaged only 2.7 percent,
less than half the growth rate of the economy.
Like total federal spending, domestic appropriations are a lower share of the
economy today (3.1 percent) than they were in the early 1990s (3.4 percent). And
domestic appropriations are below the 4.5 percent of the economy they were when
President Ronald Reagan took office.
Bush is free to argue that the public deserves even less from government in the
future--that, of course, is his agenda. But he shouldn't be allowed to get away
with blatant lies about the past.
As has been the case for decades, the far right continues to hold
schizophrenic views about the relationship between tax cuts and public spending.
According to The Washington Post's Tom Edsall, these divergent opinions
came into sharp focus at a news conference held by right-wing backers of the Bush
tax plan in February.
Shrink the hated government beast: "'I want to reduce the size
of government in half as a percentage of GNP over the next 25 years,' [antitax
activist Grover] Norquist said."
Make that lovable beast even bigger: "The pro-defense Center for Security
Policy argues that instead of åstarving' federal revenues, a tax cut ...
will 'add to future federal revenues' to pay for military spending."