SYNOPSIS: Don't compromise with Bush's tax cut- destroy it.
Was the Senate's vote to give George W. Bush only $1.2 trillion in tax cuts a famous victory for moderation? For one thing, the battle over the size of the tax cut is by no means over. Soon Mr. Bush will be out there telling the voters once again that it's time for the federal government to give back its excess cash, and that he wants to give all of us a tax break. And his handlers will try once again to create that aura of inevitability, so that despite the qualms of moderates the tax cut in all its $1.6 trillion glory (which is to say with its true cost of $2.5 trillion plus) will be enacted. Anyway, scaling down Mr. Bush's tax cut is not enough. Why? Because Mr. Bush hasn't offered a basically reasonable plan that is a few hundred billion dollars too big; he has offered a plan that is contrary to the interests of the great majority of Americans, and that has been sold under utterly false pretenses.
One of these false pretenses is the claim that there is plenty of money for tax cuts, that we can have the tax cut without endangering other priorities. Dick Cheney knows better: on Tuesday he cast the deciding vote against a Democratic amendment that would have forced the administration to actually make room in its budget for a realistic prescription drug program for retirees, the kind of program Mr. Bush promised during the campaign.
Mr. Cheney's action, in essence, freed the administration to devote so much money to its tax cuts that it can offer that drug program only if it raids the Medicare surplus — that is, it can provide additional benefits to today's retirees only by diverting the payroll taxes the baby boomers are now paying into the system, ensuring that when today's 50-year-olds reach retirement age the trust fund will be gone. In practice his vote probably means that the prescription drug benefit is dead, sacrificed to the tax cut.
The point is that even though the administration has done everything it can to hide the true budget cost of its tax plan and to inflate estimates of the amount of money available, it still can make the numbers add up only by abandoning every vestige of "compassion," including solemn promises to provide drug benefits to retirees and to improve the lives of military families. (Mary McGrory, surveying Mr. Bush's broken pledges to the military, calls him the "commander in cheap.") And Mr. Bush has understated the true budget cost of his tax cut by at least $500 billion, and overstated the amount of money available by at least another $500 billion. Some Democrats may feel that cutting his plans back by $400 billion is a great victory. Is it?
The other great false pretense is that this is a tax cut for ordinary families; again and again we hear about the "typical" family that will receive a $1,600 cut. But the administration's own figures, though it has tried to conceal them, show that families with incomes of less than $30,000 will receive an average cut of $264; families with incomes of $30,000 to $40,000 will get only $616. Do you really think that such families need those tax cuts more than they need the assurance that their parents can afford prescription drugs — and that they themselves will find a still-functioning Medicare system when they retire?
Of course, some people would benefit from the tax cut. The accounting firm of Deloitte & Touche has calculated that an individual with an income of $1 million would get a tax break of $46,758 — or much more if he is in line to inherit a large estate.
On Friday this paper ran a story about the impact of tax cuts in Montana, a state that went strongly for Mr. Bush. Guess what? Montana is a poor state — which means that not many people would get that "typical" $1,600 tax cut, and a large fraction would get nothing at all. May I suggest to big-tax-cut Democrats like Ben Nelson of Nebraska and John Breaux of Louisiana, senators from states not noted as favorite haunts of multimillionaires, that they ask whether this kind of tax cut is really in the interests of their constituents?
Mr. Bush's tax plan shouldn't be scaled back; it should be abandoned. There's still time to craft a tax cut that the nation can really afford, and that really helps ordinary people.
Originally published in The New York Times, 4.8.01