New York Times, June 1, 2004
By PAUL KRUGMAN
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Last week The Washington Post got hold of an Office of Management and Budget
memo that directed federal agencies to prepare for post-election cuts in
programs that George Bush has been touting on the campaign trail. These include
nutrition for women, infants and children; Head Start; and homeland security.
The numbers match those on a computer printout leaked earlier this year - one
that administration officials claimed did not reflect policy.
Beyond the routine mendacity, the case of the leaked memo points us to a
larger truth: whatever they may say in public, administration officials know
that sustaining Mr. Bush's tax cuts will require large cuts in popular
government programs. And for the vast majority of Americans, the losses from
these cuts will outweigh any gains from lower taxes.
It has long been clear that the Bush administration's claim that it can
simultaneously pursue war, large tax cuts and a "compassionate" agenda doesn't
add up. Now we have direct confirmation that the White House is engaged in bait
and switch, that it intends to pursue a not at all compassionate agenda after
this year's election.
That agenda is to impose Dooh Nibor economics - Robin Hood in reverse. The
end result of current policies will be a large-scale transfer of income from the
middle class to the very affluent, in which about 80 percent of the population
will lose and the bulk of the gains will go to people with incomes of more than
$200,000 per year.
I can't back that assertion with official numbers, because under Mr. Bush the
Treasury Department has stopped releasing information on the distribution of tax
cuts by income level. Estimates by the Urban Institute-Brookings Institution Tax
Policy Center, which now provides the numbers the administration doesn't want
you to know, reveal why. This year, the average tax reduction per family due to
Bush-era cuts was $1,448. But this average reflects huge cuts for a few affluent
families, with most families receiving much less (which helps explain why most
people, according to polls, don't believe their taxes have been cut). In fact,
the 257,000 taxpayers with incomes of more than $1 million received a bigger
combined tax cut than the 85 million taxpayers who make up the bottom 60 percent
of the population.
Still, won't most families gain something? No - because the tax cuts must
eventually be offset with spending cuts.
Three years ago George Bush claimed that he was cutting taxes to return a
budget surplus to the public. Instead, he presided over a move to huge deficits.
As a result, the modest tax cuts received by the great majority of Americans are,
in a fundamental sense, fraudulent. It's as if someone expected gratitude for
giving you a gift, when he actually bought it using your credit card.
The administration has not, of course, explained how it intends to pay the
bill. But unless taxes are increased again, the answer will have to be severe
program cuts, which will fall mainly on Social Security, Medicare and Medicaid -
because that's where the bulk of the money is.
For most families, the losses from these cuts will far outweigh any gain from
lower taxes. My back-of-the-envelope calculation suggests that 80 percent of all
families will end up worse off; the Center on Budget and Policy Priorities will
soon come out with a more careful, detailed analysis that arrives at a similar
conclusion. And the only really big beneficiaries will be the wealthiest few
percent of the population.
Does Mr. Bush understand that the end result of his policies will be to make
most Americans worse off, while enriching the already affluent? Who knows? But
the ideologues and political operatives behind his agenda know exactly what
they're doing.
Of course, voters would never support this agenda if they understood it.
That's why dishonesty - as illustrated by the administration's consistent
reliance on phony accounting, and now by the business with the budget cut memo -
is such a central feature of the White House political strategy.
Right now, it seems that the 2004 election will be a referendum on Mr. Bush's
calamitous foreign policy. But something else is at stake: whether he and his
party can lock in the unassailable political position they need to proceed with
their pro-rich, anti-middle-class economic strategy. And no, I'm not engaging in
class warfare. They are.
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