From the Center on Budget and Policy Priorities:
SACRIFICE IS RELATIVE:
Cost of War, Though High, Remains Far Less than Cost of Tax Cuts
By Richard Kogan
When President Bush recently requested $87 billion for the costs of war and reconstruction in Iraq and Afghanistan for the coming year, he praised the sacrifices of those stationed overseas and expressed sympathy with the burdens placed on them and their families.[1]
The word “sacrifice” invites reflection. Which Americans, other than the members of the armed services and their families, have been asked to sacrifice for the common good? Two possible answers to that question stand out.
The President’s key budget priority — large and growing tax cuts — remains unaffected by the war. While $87 billion for 2004 is costly, the tax cuts enacted since the President has taken office cost three times as much in 2004, and disproportionately favor the well off. The President does not ask recipients of the tax cut to make even the most modest of sacrifices.
Because the President does not propose to scale back either enacted or proposed tax cuts or proposed funding increases for prescription drugs, education, or other programs, all of the costs of war will be added to the already high deficits. As a consequence, the financial burden of this war will be handed to future generations.
War and Tax Cuts
Broadly defined, the costs of war will total approximately $120 billion in 2004. This figure includes up to $60 billion in expenditures during 2004 from the proposed $87 billion in additional funding for the war. (The remaining funding would be expended in years after 2004.) It also includes: $31 billion in expenditures in 2004 from the supplemental funding for the war that was enacted in April 2003; $3 billion in 2004 expenditures from the $10 billion “defense contingency” funding enacted as part of the Omnibus 2003 Appropriations bill this past February; and $8 billion in 2004 expenditures from the supplemental funding enacted immediately after September 11, 2001. Finally, the $120 billion in war expenditures in 2004 includes an estimated $18 billion for homeland security.[2]
By any accounting, $120 billion of expenditures in a single year is not cheap. It is, for example, more than twice the cost of all federal education programs, all veterans programs, or all transportation programs. It represents three times the cost of the programs run by the Department of Housing and Urban Development, and 15 times the cost of the entire Environmental Protection Administration budget. Measured as a share of the economy, it is more than half of the annual cost of the Vietnam War at its peak.
Yet the cost of the war, however large, is far smaller than the cost of the tax cuts enacted to date. According to CBO estimates, the three tax cuts enacted under the Bush Administration will cost approximately $275 billion in 2004 alone.[3] Of these tax cuts:
One-third of the costs are attributable to the three “middle-class” provisions: the new 10 percent bracket, the $500 increase in the child tax credit, and the additional tax benefits for married couples.
The other two-thirds of the costs — or about $185 billion in 2004 alone — are attributable to tax provisions that primarily or exclusively benefit the well off, principally the reductions in tax rates for the upper tax brackets, the investment tax breaks for businesses, and the reduced tax rates on dividends and capital gains.
Estimates separately provided by CBO and Citizens for Tax Justice suggest that in 2004, approximately $85 billion of the tax cuts will accrue to the top one percent of Americans. These individuals live in households with income in excess of $300,000 per year. The average income of such households exceeds one million dollars per year. |
