Site Presented By
Tuesday, Nov 10, 2009
Bush's tax cuts won't do much to create jobs or boost economic growth, but they will bankrupt the nation's retirement program. That's the plan, anyway.
Jun 12, 2003 | On May 28, in a ceremony in the East Room of the White House, President Bush signed into law the Jobs and Growth Tax Relief Reconciliation Act of 2003, the second major tax-cut bill of his presidency. The plan, which carries an official 10-year price tag of $350 billion but is likely to cost several times as much, has come under heavy criticism from Democrats and some Republicans, but as he signed the bill Bush insisted it would revive the U.S. economy.
The mechanism, as he outlined it, seems simple: The new tax cuts, Bush said, will let Americans keep more of "your own money." And "when people have more money, they can spend it on goods and services. And in our society, when they demand an additional good or a service, somebody will produce the good or a service. And when somebody produces that good or a service, it means somebody is more likely to be able to find a job."
As the United States' economic doldrums continue, evaluating whether Bush's tax cuts make sense becomes an increasingly pressing task. The Dow may be rising, but employment is continuing to fall. Deflation is possible. The dollar is weakening. Local and state governments are beset by their own deficits, while the federal debt is ballooning at an astounding rate -- on Tuesday, the Congressional Budget Office warned that the federal government is headed for a record $400 billion deficit in 2003. And, perhaps most critically, there is a massive financial crisis looming on the horizon: the budget bomb caused by huge Social Security and Medicare benefits that will be paid out to retiring baby boomers beginning in 2008.
The White House says that supply-side tax cuts will cure all of our economy's problems, but a look at the record of such cuts in the Reagan years suggests just the opposite. Indeed, to many observers, a relentlessly executed program of tax cuts seems designed to accelerate a Social Security catastrophe, not avoid it.
Even staunch conservatives are beginning to express doubts. In the New York Times Magazine on Sunday, Peter Peterson, the chairman of the Federal Reserve Bank of New York and Richard Nixon's commerce secretary, noted that under Bush the Treasury has turned $5.6 trillion of projected surpluses into an estimated deficit of $4 trillion.
"Since 2001, the fiscal strategizing of the party has ascended to a new level of fiscal irresponsibility," Peterson wrote. "For the first time ever, a Republican leadership in complete control of our national government is advocating a huge and virtually endless policy of debt creation."
A charitable explanation of why Bush is still pushing tax cuts is that it's all he knows how to do: It's his one policy, and by God he's sticking to it. But there's another, perhaps more convincing rationale: the argument that Bush's deep, permanent cuts are in the service of a central conservative political goal, an eternally hobbled federal establishment.
Such a strategy was attempted before -- during the Reagan years, but even then, a huge tax cut was soon followed by several tax increases. Such a course correction seems increasingly unlikely in the current political climate. Bush's policies will prevail long after he's gone. There will be precious little money for social programs, or environmental protection, or homeland security. And if Democrats want any of these things, they'll face a stark choice: They can ask for tax increases and commit political suicide. Or they can give in to what may be Bush's main reelection plank, using the coming baby boomer retirement disaster as an excuse for privatizing Social Security.
