By: Mary Mostert, Analyst, Banner of Liberty (www.bannerofliberty.com)
February 9, 2001
Yesterday President Bush sent the largest Tax Cut Plan to Congress since President Reagan's tax cut in 1981. It is twice the size of the 792 Republican tax cut bill, which was passed by the Republican controlled Congress in September 1999, which was vetoed by Bill Clinton. Remember what the Democrats were saying about tax cuts a mere year ago?
On September 23, 1999, Senator Levin chided the Republicans for their "a fantastic, unrealistic, and unwise assumption" that there is "an estimated $1.4 trillion worth of surplus funds available for tax breaks and whatever else needs attention."
A few months later, Bill Clinton announced from the White House "a non-Social Security surplus of $1.9 trillion over the next 10 years." Still, the Democrats didn't want to reduce taxes after being so proud of Clinton for his success in passing the largest tax increase in American history in 1993. What Clinton and the Democrats wanted then, and want now, are more Federal entitlement programs to re-distribute the wealth in compliance with their socialist views.
They were totally convinced that their class warfare approach to the subject would sweep Al Gore into the White House. It didn't. In fact, in spite of the media's support during the presidential campaign for the notion that the American people didn't want a tax cut, it appears that taxes may well have been the issue that put George W. Bush into the White House.
Even the liberal Washington Post appears to be recognizing that, perhaps, we are in a different ballgame than we were when Bill Clinton was in the White House. President Bush's Treasury Secretary, Paul H. O'Neill, the Post worries, doesn't just want to "win the debate" on the tax cut, He's determined, in the process, to change the rules of the game."
"It's the morning after President Bush kicked off his campaign for a $1.6 trillion tax cut, and a frustrated Treasury secretary makes it clear that he's already had enough of the Washington game. O'Neill said:
"I don't believe this society should still be operating with a robber-baron premise as the basis for how we discuss public policy. I think it is really corrosive to have this argument about the rich and the poor. It's not worthy of where we are in our development as a country."
Once again the Democrats are hoping to kill the tax cut by using Marxist lingo about the "class struggle" between the bourgeois and the proletariat, the rich and the poor.
O'Neill "delivered his broadside," the Post said, "with the authority of a former corporate chieftain widely credited with turning a failing aluminum company into a global powerhouse. Never mind, he said, that the federal income tax would be slightly more progressive after the Bush cuts than before. And never mind that a typical family of four with income under $35,000 would pay no income tax and that $32 billion in tax credits would continue to flow every year to working families as income supplements. Still, he said, Democrats and their allies in Washington can't resist playing to the populist instinct 'to get those rich, dirty SOBs and the way we're going to do it is to tax them.'"
The Democrats weren't used to that kind of bluntness from Republican circles. In fact, they were offended. Senate Minority Leader Thomas Daschle (D-SD) complained that "the debate over who gets what tax breaks" HAS to take place in the context of "an economy where the richest 1 percent of households have seen their income double over the past two decades while those in the bottom 20 percent have seen their incomes decline."
Robert Greenstein, executive director of the liberal Center on Budget and Policy Priorities complains that the Bush tax cut "would indeed be heavily skewed toward those at the top of the income spectrum. The richest one percent of the population would receive substantially more in tax cuts than the bottom 80 percent of the population combined."
He doesn't think the rich should have ANY tax cut. He is wrong for two simple reasons. First, the rich would get larger tax cuts than the poor because the rich are the ones paying most of the taxes. Second, by giving the rich tax cuts, more taxes will free money for investments and investments create jobs. If part of the goal is to head off a possible recession, the best way of doing it is to cut taxes for the people who create jobs.
Greenstein notes that "The bottom 40 percent of tax filers would receive four percent of the tax cuts. The average tax cut for this group would be $115." And just who ARE the bottom 40 percent of tax filers? They are the folks who file tax forms so they can get the earned income tax credit. They not only don't pay ANY tax but also are given money out of the US treasury to bring their income up to a higher level.
Daschle ridicules the Bush Tax Plan, claiming it was a plan "for offering the rich a new Lexus while giving working families enough to buy a new muffler for the used car. I don't consider that class warfare."
O'Neill, who was as chairman of Alcoa Inc., brought a faltering company to an international business success, was blunt in his response to the Democrats. The tax code should not be used to "level the field and say that everyone should have the same amount of income. I think we've demonstrated as a people that we don't think some form of socialism is the way to run a society."
Of course it isn't. George W. Bush may very well have a kind and gentle and listening ear towards the Democrats, but some of his appointees are quickly putting the Democrats on the defensive. After being told it would probably takes months to get the tax cut passed, in spite of a threatened recession, O'Neill responded:
"It's just annoying to me that people have all these damned excuses." In the corporate world, he noted, it would be taken care of in a matter of weeks.
When he was chided about the comparison, and reminded that he was "now in Washington," he shot back: "So what? Isn't it really time that we changed some of these conventions? I think it is. It's time we rethought how we do stuff in this town."
O'Neill actually delivered to a nine-page document describing the plan Bush campaigned on. That plan doubles the $500 per child tax credit, which Republicans pushed through in the last Congress, reduces income-tax rates, reduces the marriage penalty tax which penalizes couples for getting married, rather than just living together and makes permanent the temporary credit for business research.
For families, that's a chunk of money. I have 25 grandchildren. Just the $500 per child increase in tax credit for my family would mean an overall increase of $12,500 more that my children would have to spend on their children. That would buy a lot of orthodontist visits, computers, and shoes for my grandchildren.
It sure would go a long way towards ending any personal economic recession in the family. O'Neill is right. It's time the Democrats discover that families can use their money to better advantage than the politicians can.
To comment: mmostert@bannerofliberty.com
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