SWALLOW THE MONEYposted by mathowie at 11:05 PM on August 29, 2001
Creating a 10 year tax cut in the
face of slowing economic times:
$1.35 trillion
Dipping into a Social Security
surplus that was described as
untouchable during the election:
$9 billion
Creating a fiscal strategy designed
to divert money away from your political
opponents regardless of its effect on
the health of the economy:
Priceless
During the key moments of the Watergate story, an informant known as Deep Throat advised two young reporters from the Washington Post to "Follow the Money." To follow the story line of the current and upcoming budget debates, it may be more helpful to follow the absence of money. Getting rid of the cash that Congress can spend is at the core of the Bush fiscal strategy. Politics is about money and this is the way that W wants to re-appropriate funds to the advantage of the Republicans. One can certainly argue that there is nothing wrong with such goals as getting more votes, gaining more power and debilitating the opposing party is the name of the game in Washington D.C (or Crawford, TX for that matter).
So if you are on the Bush team, how do you achieve the goal? Well, first you need to get rid of the excess money. Excess money can be spent by Congress and much of that spending is directed towards organizations made up of folks who vote for the other team. Don't take my word for this. Last week W himself announced that the dwindling fiscal surplus was "incredibly positive news" that would "create a fiscal straitjacket for Congress."
Some parents use this model. They don't actually spend all of their money, they just tell the kids - during a moment of exhaustion - that the family simply doesn't have the money for that new ping pong table. And what kid, without the aid of a serious sugar boost, can really argue with that logic. Mommy and Daddy are not saying they won't, they are saying they can't.
So, you're back in Crawford and you pick the most windy day to load the budget surplus into the back of an open pick-up truck and you just start driving. That, coupled with a mass mailing of tax cut checks worth a few hundred bucks a piece, and you can get rid of the dough in a hurry. And when you get back to the ranch with an empty pickup, you can exclaim: "This is incredibly positive news."
You argue that those checks will stimulate the economy (conveniently ignoring the fact that for the last several years - during which we had no such cuts - the economy had been more stimulated than teenage boy in a strip club feeding intravenously off a bottomless Red Bull drip). Nobody really believes that a couple hundred bucks a piece is going to stimulate a consumer class when each of us has a couple cars, most of our furniture, the kids' college education, our last few family vacations, a big screen and a new Playstation 2 all spread across about seventy-two credit cards (my wife and I use them as shingles during the rainy season). And in fact, the whole stimulus thing isn't working as consumer confidence fell unexpectedly during the month when the checks arrived in our mailboxes. But remember, it is not really about that. It is about getting rid of the money.
Now you can't simply stop all government support of public programs. So how do you support programs without giving the Democrats a way to dish out cash to their voters at non-profits across the nation (and don't get me wrong, dishing out cash is their specialty)? Well, here's an idea. What if you diverted some of those funds that go to groups that are for the most part run by voters for the other team and redirect the dough to institutions that tend to be more conservative and vote for your team. Enter the Faith-based initiative. Never mind the fact that most faith-based organizations don't want to have to deal with strings that come attached to any government funding. It isn't about where the money is. It's about where the money isn't.
This isn't a one way road. One the opposite side of the highway from that open pickup truck is a Democrat street cleaner that is scooping up all the cash so that they can create more public programs that tend to benefit their constituents. That's politics. As a voter, you just need to decide which political strategy suits your needs and/or the needs of your fellow citizens.
The Bush administration likes to describe themselves in corporate terms and explain that they are running the country like a fiscally responsible corporation. Didn't Webvan say the same thing?
UncleFes:the tax cut amounted to about $43B; the "surplus" (har dee har) that was lost amounted to about $120B. So it can hardly be said that the tax cut (which tend to spur economic activitiy, not kill it) eliminated the surplus. The surplus was just an accounting fiction, anyway.
Wow, that's horribly misguided/deceptive. First of all, the tax cut is $1.6 trillion over 9 years- it's only the one time pre-rebate that's about $40B. That rebate encompasses only part of the tax cut plan for this year alone, namely the 10% rate- down from 15%- on the first $6,000 of income; tax cuts in the income tax on all other levels will be felt in April 2002, hence the lost surplus. Now, as for the surplus being an "accounting fiction"- funny you should say that, since the pie-in-the-sky $5.6T surplus was the justification for the tax cut and how we could afford it, no? So what, when we need to sell the sucke- er, the voters, on a "richest-1%" tax cut, we talk about the huge surplus, but later when someone points out that the surplus has all but disappeared due to the tax cut, we dismiss said surplus as having never been anything more than an accounting fiction anyway? Wow, and they called Clinton slick...
various:the reason the richest people get the biggest tax break is because they paid the most taxes.
The whole "Rich people shouldn't pay higher taxes" argument has been beaten into the ground so many times, I'm not going to rehash it here. However, while it's one thing to argue for flat taxation- and never forget that income taxes are only one of the taxes paid- would those arguing the rich are getting screwed argue that taxation should be regressive- i.e., that the less you earn the higher the percentage of your income that goes to taxes?
This forced Era of Austerity via the steamrolled tax cut program has the effect of instituting a slide towards regressive taxation. Observe:
Which leads us to this inevitable conclusion: dipping into SS "surpluses" will cause non-SS gov't program to be funded in part by "regressive" as opposed to "progressive" taxes, and will balance lower income taxes with either a) SS shortfalls down the line or b) an eventual raise in the SS tax rate. While we could argue all day that Social Security in itself should be regressive since the very rich won't draw from it- I tend to disagree with that, but hey- and we could argue all day that the income tax should be flat and not progressive- again, I disagree- what cannot be argued is that if the SS funds go to general gov't programs, taxation will become more regressive. And I can't believe anyone would be arguing that general government programs- from schools to roads to the military- should be funded on a regressive tax scheme!!!
As for the "T-bills loaned to the government by itself" rantings, here's an interesting op-ed I read in the Seattle Times today- syndicated columnist I'm not familiar with- trashing the "someone else's promises" nonsense. T-Bills are the safest investment in the world, and have been for years. SS is not a retirement plan, it's a plan where payments are made this year on what's collected this year; shortfalls are made up from previous year's surpluses- which are, yes, funded by other tax revenue to payback those T-Bills- as may be the case in 10 years when those boomers are retiring. However, if we start dipping into those surpluses now to pay for the hole left by tax cuts, Bush will have long been safely retired on his "ranch" in Crawford, laughing at the fools that are the voters who wonder in ~2016 where their SS payments are while millionaires and billionaires have banked beaucoup bucks from eliminating some or all of their estate, income, and capital gains tax responsibilities.
Har dee har, indeed...
posted by hincandenza at 4:26 AM on August 30, 2001
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Three points on the tax cut:
(a) the tax cut amounted to about $43B; the "surplus" (har dee har) that was lost amounted to about $120B. So it can hardly be said that the tax cut (which tend to spur economic activitiy, not kill it) eliminated the surplus. The surplus was just an accounting fiction, anyway.
(b) As for Bush dipping into the "social security lockbox" to replace the surplus, that's another accounting fiction. The money you pay in goes out to current beneficiaries; what's left over is grabbed by congress and spent; in return, they throw T-bills into an account called "social security." Which would be fine if it was you or me buying t-bills and putting them in an account, but the government *issues* t-bills. They're writing themselves IOUs, and that money is going to have to come from somewhere when the bills come due. Since government doesn't do any business, manufacture any product or sell any service, it doesn't generate any revenue. The backing on those bonds is your future tax money.
(c) $300 bucks is nothing. Why's everyone got their panties in a wedge? $300 is like 2% of my total annual federal tax bill. Whoopity doo.
posted by UncleFes at 10:53 PM on August 29, 2001