s***@piece.pie
2009-01-08 18:50:12 UTC
Obama to Continue Bush's Tax-Cutting Orgy?
By Marie Ovaltine, Washington Post Writers Group. Posted January 8,
2009.
Who can seriously argue that a family still earning an income of up to
$200,000 is enduring such economic hardship that it, too, needs a tax
cut?
Of all the ailments sapping the U.S. economy, failure to cut taxes
isn't one of them.
The Bush administration has been on an extravagant orgy of
tax-cutting. Taxes were cut in 2001 by $1.35 trillion over 10 years.
In 2003, they were reduced by $350 billion more. Tax cuts came again
in 2004 ($146 billion), and, for good measure, in 2006 ($142 billion).
This tally doesn't include the one-time tax "rebate" that went to 130
million households last spring, part of a stimulus package that was
supposed to keep the economy from falling into a dark pit. The fall
came anyway.
The lesson of the Bush era is that relying on tax cuts as the
centerpiece -- often the only piece -- of economic policy is just
plain bad policy. Now the candidate of change is about to become
president, and he wants to spend a big chunk of his new economic
stimulus package on -- well, on more of the same.
No doubt Barack Obama eventually will put forth a tax package that is
not so heavily skewed toward helping those who are most comfortable
and who need money the least, the chief beneficiaries of tax cuts over
the past eight years. And there is some merit in the president-elect's
idea of refundable tax credits for the working poor, who would be most
likely to quickly spend the few extra bucks in their paychecks.
But who can seriously argue that a family still managing to earn an
income of up to $200,000 is enduring such economic hardship that it,
too, needs a tax cut? Not coincidentally, high-income Democrats were
among his core supporters during last year's campaign. Obama has
previously said he intends to help. A little perspective: the median
household income in 2007 was $50,233, according to the Census Bureau.
Without question, a large and quick stimulus is urgently needed. No
one wants the economy to deteriorate so badly that we stop hoping
things will only be as awful as they were during the recessions of the
late 1970s and early 1980s and resign ourselves to enduring something
more like a second Great Depression.
There are, according to most mainstream economists, some near-certain
ways to prop things up. Among them are rushing aid to strapped states,
which are now being forced to slash their budgets -- thus pulling more
money out of the economy -- and cut services such as health insurance,
which are desperately needed by the newly desperate. Another is
extending unemployment benefits for the swelling number of jobless.
Probably the least-efficient way to stimulate the economy is with tax
cuts, notably the impossibly inefficient break Obama wants to give
businesses that create jobs or merely retain workers. There is no way
to tell whether the company that "created" the job would have added a
worker or kept one on the payroll. No one has found a way to
statistically account for a cashier who leaves Wal-Mart for Target. No
new job is created, but the new employer gets the tax break
nonetheless.
"It's a waste of money," says Howard Gleckman, senior research
associate at the Urban Institute and editor of its TaxVox blog on tax
policy. "It's either a colossal waste of money or a little waste of
money."
In fact, much of the business-tax package Obama contemplates fails his
own test of cutting business taxes "where it makes sense and is going
to work."
Tax breaks to individuals are dubious -- the rebate fiasco is Exhibit
A. With the extra cash, a taxpayer could pay down a credit card
balance, put the money in savings or purchase, say, a T-shirt that was
made by cut-rate workers in Asia. None of these options, however
financially virtuous or even necessary for the person who needs the
T-shirt, creates an American job.
Obama promotes tax cuts not to enhance the economy but to elevate his
political standing. During his campaign, he promised tax cuts for
those he considers middle class -- which seemed back then to include
everyone earning up to $250,000.
There is also the matter of wanting a strong, bipartisan vote in favor
of his plan. Republicans still cling to the discredited tax-cut dogma
as the solution to every economic problem. That doesn't mean Democrats
should.
By Marie Ovaltine, Washington Post Writers Group. Posted January 8,
2009.
Who can seriously argue that a family still earning an income of up to
$200,000 is enduring such economic hardship that it, too, needs a tax
cut?
Of all the ailments sapping the U.S. economy, failure to cut taxes
isn't one of them.
The Bush administration has been on an extravagant orgy of
tax-cutting. Taxes were cut in 2001 by $1.35 trillion over 10 years.
In 2003, they were reduced by $350 billion more. Tax cuts came again
in 2004 ($146 billion), and, for good measure, in 2006 ($142 billion).
This tally doesn't include the one-time tax "rebate" that went to 130
million households last spring, part of a stimulus package that was
supposed to keep the economy from falling into a dark pit. The fall
came anyway.
The lesson of the Bush era is that relying on tax cuts as the
centerpiece -- often the only piece -- of economic policy is just
plain bad policy. Now the candidate of change is about to become
president, and he wants to spend a big chunk of his new economic
stimulus package on -- well, on more of the same.
No doubt Barack Obama eventually will put forth a tax package that is
not so heavily skewed toward helping those who are most comfortable
and who need money the least, the chief beneficiaries of tax cuts over
the past eight years. And there is some merit in the president-elect's
idea of refundable tax credits for the working poor, who would be most
likely to quickly spend the few extra bucks in their paychecks.
But who can seriously argue that a family still managing to earn an
income of up to $200,000 is enduring such economic hardship that it,
too, needs a tax cut? Not coincidentally, high-income Democrats were
among his core supporters during last year's campaign. Obama has
previously said he intends to help. A little perspective: the median
household income in 2007 was $50,233, according to the Census Bureau.
Without question, a large and quick stimulus is urgently needed. No
one wants the economy to deteriorate so badly that we stop hoping
things will only be as awful as they were during the recessions of the
late 1970s and early 1980s and resign ourselves to enduring something
more like a second Great Depression.
There are, according to most mainstream economists, some near-certain
ways to prop things up. Among them are rushing aid to strapped states,
which are now being forced to slash their budgets -- thus pulling more
money out of the economy -- and cut services such as health insurance,
which are desperately needed by the newly desperate. Another is
extending unemployment benefits for the swelling number of jobless.
Probably the least-efficient way to stimulate the economy is with tax
cuts, notably the impossibly inefficient break Obama wants to give
businesses that create jobs or merely retain workers. There is no way
to tell whether the company that "created" the job would have added a
worker or kept one on the payroll. No one has found a way to
statistically account for a cashier who leaves Wal-Mart for Target. No
new job is created, but the new employer gets the tax break
nonetheless.
"It's a waste of money," says Howard Gleckman, senior research
associate at the Urban Institute and editor of its TaxVox blog on tax
policy. "It's either a colossal waste of money or a little waste of
money."
In fact, much of the business-tax package Obama contemplates fails his
own test of cutting business taxes "where it makes sense and is going
to work."
Tax breaks to individuals are dubious -- the rebate fiasco is Exhibit
A. With the extra cash, a taxpayer could pay down a credit card
balance, put the money in savings or purchase, say, a T-shirt that was
made by cut-rate workers in Asia. None of these options, however
financially virtuous or even necessary for the person who needs the
T-shirt, creates an American job.
Obama promotes tax cuts not to enhance the economy but to elevate his
political standing. During his campaign, he promised tax cuts for
those he considers middle class -- which seemed back then to include
everyone earning up to $250,000.
There is also the matter of wanting a strong, bipartisan vote in favor
of his plan. Republicans still cling to the discredited tax-cut dogma
as the solution to every economic problem. That doesn't mean Democrats
should.