Fiscal Poison
The federal tax cut, smaller than Bush wanted, will still drive the U.S. deeper into debt.
May 23, 2003
Basking in the glow of victory, Republicans in Washington announced agreement this week on a plan to comfort the financially comfortable while driving the federal government deeper into deficit and debt.
The deal between House and Senate Republicans, ramrodded by the White House, will cut $330 billion in taxes over 10 years and give $20 billion in aid to cash-strapped states. Sold as a vehicle to stimulate economic growth and create jobs, few economists outside the GOP inner circle believe the ruinous tax cuts that favor the rich will accomplish either objective. Apparently, disingenuous rationales will do for a White House ideologically committed to tax-cutting.
Stumping for his first big cut in 2001, President George W. Bush insisted that, with a projected $5.6-trillion surplus, Americans could have it all: huge tax cuts, debt reduction, prescription drug coverage for the elderly and beefed-up Social Security and Medicare programs.
Bush got his tax cut: $1.35 trillion over 10 years. But the elderly haven't gotten drug coverage and the nation is still waiting for action on Medicare and Social Security. And rather than wiping out the national debt, Washington is staring down the barrel of the largest annual deficit in history while Congress is poised to authorize a record $984 billion in additional borrowing just one year after it raised the debt ceiling by $450 billion.
Add the expenses of the war on terrorism and the rebuilding of Iraq and it is clear to anyone not blinded by ideology that the federal government simply can't afford another tax cut.
Undaunted by fiscal reality, Republicans insist more tax cuts will create jobs. The 2001 tax cut didn't. The limp national economy has lost 1.9 million jobs in the past two years.
The tax cut awaiting final congressional approval would have been worse if not for a handful of Republicans who gagged on the $726-billion 10-year cut Bush wanted, and the $550 billion sought by the House. But whether huge or simply big, these tax cuts are still fiscal poison.
Copyright © 2003, Newsday, Inc.
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