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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: Kip518 who wrote (19549)	5/24/2003 10:04:31 AM
From: Wharf Rat	Read Replies (2) \| Respond to of 89467

Unkindest tax cut is bound to fail George Bush's tax cuts are going to worsen the inequity in American society, writes Julian Borger Thursday May 22, 2003 The Bush administration prides itself on being a government of conviction, and rightly so. It sticks to policies even when circumstances and popular opinion change. It also sticks to them when they clearly don't work. The White House, for example, remained determined to change the regime in Iraq even after it became clear that very few nations were prepared to back the US, and that there was insufficient evidence to persuade them. Similarly President Bush has stuck to his insistence on successive, sweeping tax cuts, despite the uncomfortable fact that the premise on which they were first proposed - a large government surplus - has evaporated. Individually these policies involve bold risks. Together they represent a recklessness that could inflict lasting damage on the US economy. Wrangling continues over the size of the tax cut. Bush wanted to axe $726bn (£444bn) over 10 years, but said he would accept $550bn (£336bn). The Senate has voted for $350bn (£214bn). Either way it would be one of the largest cuts in US fiscal history, all the more remarkable for having been passed at a time of war - not just one war, but several at the same time - and sharply rising government deficits. The cuts defy conventional economics, which predict that a steep rise in government borrowing will push up interest rates and depress private investment, squeezing the economy dry. However, the Bush administration has as little time for conventional economics as it has for conventional wisdom. Its election in 2000 represented a return to power of a Reaganite economic sect, the supply-siders, who believe that by freeing the company and the individual from taxes, you liberate creative energy and boost the economy. Economic growth will then take care of the deficits. The supply-siders have been able to piggy-back on the Bush machine not because their views have a solid footing in economic thought but because they are compatible with the desire of big money campaign contributors to pay less tax (and indeed they benefit disproportionately from the Bush plan) and an ideological mission to shrink federal government. Bush has inherited that mission not from his father (who called supply-side theory "voodoo economics") but from Ronald Reagan. But he has also inherited Reagan's belief in military solutions to US problems abroad - a fiscal contradiction. The Bush defence budget represents the biggest leap in military spending since the Reagan years. Furthermore, much of the oversight imposed on Pentagon spending since the Reagan era of thousand-dollar wrenches and bolts is being dismantled. It is even more difficult to counter defence contractor profligacy now than it was in Reagan's day. Being "soft on communism" then could be politically damaging. Being seen as "soft on terrorism" now is electoral suicide. The consequences of these policies are being felt the way they were in Reagan's day - in government borrowing (in other words bills that future generations will have to pay) and in severe cuts in social spending. In fact the public sphere in American cultural life is visibly eroding. Expenditure on basic social needs - education, healthcare and infrastructure - is likely to be reduced by at least $100bn (£61bn). The states are facing their worst fiscal crisis since the Great Depression and have been denied further funding. Their legal requirement to balance their budgets has forced state governments to cut spending, closing libraries, parks, hospitals and schools. Some states have started to withdraw health care for the poor and mentally ill. Policemen and teachers are being laid off. This is not how "compassionate conservatism" was sold. In his first year in office, Bush cemented his image as a moderate by pushing through a bipartisan education reform bill entitled "No Child Left Behind". The idea was to spend more on schools but to submit their pupils to more tests to ensure the money was not going to waste. The bill scored headlines and warm words from the icon of the Democrats, Senator Edward Kennedy. Two years on, the plug is being pulled on the law's ambitions. The funding proposed for the 2003 budget is $47bn (£29bn) below the scheme's requirements. Kennedy derided the plan as a "tin cup budget" that "may provide the resources to test our children, but not enough to teach them". Consequently up to 85% of state schools may be classified as "failing" under the new law. As such, they face sanctions including "reconstitution" - the dismissal of a school's entire staff. Even special school subsidies for soldiers' children are being cut, an act of extraordinary hypocrisy for a president who lionises the military. Just as the benefits of the Bush tax cuts will flow primarily to the rich, the impact of the spending cuts will fall disproportionately on the poor, who are more vulnerable than they have been in a generation. According to a recent report by the Children's Defence Fund, the number of black children living in extreme poverty (where household income is less than half the federal poverty line) is at its highest level in 23 years. Not only is the Bush tax cut likely to sharpen radically the inequity in American society, it is also unlikely to work. The Congressional Budget Office - under the guidance of a Bush appointee - concluded that it would have a small or even negative impact on economic growth. As a mechanism for generating employment, it is absurdly expensive. Even under the administration's most optimistic projections the cost in tax-cuts per job will be $500,000 (£305,000). guardian.co.uk The administration's typical reaction to such analyses is to commission another study. After all, faith-based policy making cannot by definition be proven misguided. Perhaps for that reason, President Bush's convictions are said to help him sleep well at night after he makes a decision. · This article also appears in Guardian Weekly