Best Argument Against Tax Cuts Is ‘What You Lose’
As Republicans repeatedly cut taxes to “starve the beast” — meaning the government — Democrats should re- introduce voters to the “beast,” showing them what they’re losing in terms of quality education, health care and homeland security. [IMGCAP(1)]
That’s happening a bit on both the House and Senate sides of the Capitol, but it ought to be party policy high and low to show voters what massive GOP tax cuts mean in terms of cuts in programs.
The case is being made most consistently by Rep. David Obey (D-Wis.), who argued at a House Appropriations subcommittee markup last week that “the Republican Party in Congress is willing to put huge new tax gifts for the most comfortable in our society ahead of every other economic and social value.”
Citing the House GOP move to cut inheritance taxes by $800 billion over 10 years, Obey said, “That money would be enough to take care of 30 percent of the long-term Social Security shortfall. It would be enough to provide a decent, rather than a token, prescription drug benefit for our seniors.
“And,” he said, “it would have given us many times over enough room to fix this bill,” referring to the proposed appropriation for the Labor, Health and Human Services and Education departments.
Obey, ranking member on Appropriations, pointed out that, to pay for tax cuts, Republicans were underfunding education programs including President Bush’s own No Child Left Behind Act, allowing thousands of poor children to be thrown off Medicaid and providing less money than Bush requested to reverse the shortage of nurses in the country.
Democrats can pick up on his theme and point out that GOP tax cuts will cause reductions in military housing, port security, land conservation and aid to state governments, which are laying off teachers and dropping child care for welfare recipients trying to work.
So far since Bush took office, taxes have been cut by a nominal $1.7 trillion over 10 years, though the amount surely will exceed that — perhaps double it — when cuts are extended beyond their scheduled “sunset” dates.
And Republicans seem to have in mind annual new tax cuts, probably to eliminate taxes on dividend income, shelter savings from taxes and cut capital gains rates even further.
Bush argues for tax cuts by claiming they’ll stimulate economic growth and create jobs, but he and other Republicans also make it clear that they want to deprive the government of revenue — “starve the beast.”
Democrats have been fighting back mainly by saying GOP tax cuts haven’t produced growth yet — and won’t — and also that they primarily benefit the rich and deepen the federal deficit.
Such arguments, while valid, tend to be speculative, ideological or theoretical. It’s true that, despite Bush’s tax-cutting, the economy is still losing jobs. But a turnaround may be under way. We’ll know by next year’s elections.
It’s true that GOP tax cuts are skewed to upper-income taxpayers. Because inheritance and investment taxes have been cut — and payroll taxes paid by ordinary workers have not — the total share of federal taxes paid by households with incomes greater than $400,000 a year will fall from 24.3 percent to 22.8 percent by 2010.
And, it’s true that the deficit is deepening. Officially pegged at $400 billion, it may reach $500 billion this year, according the House Budget Committee Democrats. Instead of a $5.6 trillion budget surplus once projected for the period 2002-2011, Democrats charge there will be a $3.6 trillion shortfall, “a $9.2 trillion reversal.”
Republicans fight off the “fairness” argument by saying Democrats are indulging in “class warfare” and the “fiscal irresponsibility” argument by saying long-term deficit projections are unreliable.
They also say Democrats are “big spenders.” But GOP tax cuts are so big that budget cuts are beginning to bite into programs that make a difference to ordinary Americans — or people ordinary Americans care about.
That’s the case that Democrats can succeed with politically.
With a publicity blitz, for instance, Obey succeeded in reversing a GOP plan to cut federal assistance to school districts where military installations are located — especially the home bases of combat units deployed to Iraq.
He has served notice that he plans to introduce amendments to reduce the tax breaks given to millionaires next year by just $5,000 — from $88,000 to $83,000 — to free up $1 billion to be spent on homeland security items cut from the budget and to improve inadequate housing for military families.
At the appropriations hearing last week, Obey pointed out that Bush was slowing the pace of medical research by dropping the National Institutes of Health budget from a 15 percent annual growth rate to under 3 percent, less enough to keep pace with inflation.
“Each year, 1.3 million people find out that they have cancer,” he said. “More than 1 million find out that they have diabetes, and 60,000 find out that they have Parkinson’s disease. …
“Tell them that it’s more important to pass a gargantuan tax cut than it is to push the throttle down in finding cures for these diseases,” he said. That’s an effective way to fight.