Jewish World Review Feb. 9, 2006/ 11 Shevat,
THOSE @%# TAX CUTS!
National Public Radio's Terry Gross recently interviewed economist Douglas Holtz-Eakin, the head of the Congressional Budget Office from 2003 to 2005. The job of the CBO staffed primarily by economists is to compute federal cost estimates as well as estimates of the impact of unfunded mandates on state and local governments and the private sector.
Did Gross question the wisdom, the expense or the fairness of expanded social and entitlement programs? No. But, boy, does she raise questions about those @%# tax cuts.
Gross: "The president would like to continue his program of tax cuts. Can you sum up your warnings about how the debt will increase if we continue to cut taxes without significantly decreasing our spending?"
Recall that President George W. Bush first "returned" $300 to all taxpayers, regardless of income. Second, the president lowered the top income tax rate in stages from 39.6 percent to 35 percent, and then decreased the tax rate on dividends and capital gains. Everyone, therefore, who paid taxes got a break.
Did "the rich" benefit more than others? Yes, because "the rich" pay a lot in taxes. Today, the top 1 percent of taxpayers (those with an adjusted gross income over $295,495), for example, pay 34.3 percent of the total federal personal income taxes, while earning 16.8 percent of all taxpayers' adjusted gross income. And in most states, taxpayers also face additional income taxes. (In California, for example, residents with an income over $41,476 pay another 9.3 percent on that income.)
Gross: "This is the first time, as far as I understand it, that we've cut taxes during wartime. What does the math look like, paying for Iraq while cutting taxes?"
President John F. Kennedy a Democrat also supported tax cuts.
In 1964, President Lyndon Johnson signed Kennedy's tax cut, reducing the top marginal tax rate from 91 percent to 70 percent. Tax revenues increased from $94 billion in 1961 to $153 billion in 1968, an increase of 63 percent, or a 33 percent increase if adjusted for inflation. But Kennedy, in arguing the case for his tax cut program, said, "For all these reasons, next year's tax bill should reduce personal as well as corporate income taxes: for those in the lower brackets, who are certain to spend their additional take-home pay, and for those in the middle and upper brackets, who can thereby be encouraged to undertake additional efforts and enabled to invest more capital."
Ms. Gross also failed to note that combat began in Vietnam in 1965, one year after Kennedy's tax cuts were signed by Johnson.
Gross: "Can you make the connection for us the amount of money that the tax cuts take out of the budget with the amount of money that the war adds to the budget?"
President Ronald Reagan lowered the top marginal tax rate from 70 percent to 28 percent, overseeing a doubling of federal income tax revenues. Again, Ms. Gross fails to note that the tax cuts of the '60s and the '80s occurred during the Cold War. But apparently that was not a real war.
Gross: "So what advice would you have about the wisdom of continuing the tax cuts now, which is what the president would like to do?"
Under President George W. Bush, net federal receipts went from $1.99 trillion in 2001 to $2.15 trillion in 2005, an 8 percent increase, although when adjusted for inflation, receipts show a negligible decrease.
Deficits, however, increased. That's because Congress kept spending, and the president failed to use his veto. And just wait until the Baby Boomer generation some 75 million strong retires, placing additional demands on Social Security, Medicare and Medicaid. Excluding defense, homeland and national security, spending under Bush increased at a rate faster than any president since Johnson. Bush signed the most expensive farm bill ever some $190 billion over 10 years. Under this president, federal education spending including No Child Left Behind has more than doubled, from almost $36 billion in 2001, to over $72 billion in 2005. Bush signed the prescription benefit bill for seniors estimated to cost $1.2 trillion dollars or more over the next decade definitely the largest expansion of a social program since Medicare was established by the Social Security Act Amendments of 1965.
Gross's persistent questioning of the Bush tax cuts and her indifference toward spending makes this statement: It's not your money, and we can spend it better. Then-President Clinton, in giving a speech about the then-surplus, said, "We could give it all back to you and hope you spend it right. . . . But . . . if you don't spend it right, here's what's going to happen . . . "
Just remember, it's not your money.
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JWR contributor Larry Elder is the author of, most recently, "Showdown: Confronting Bias, Lies and the Special Interests That Divide America."
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