It's the Ideology, Stupid
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If you are a regular reader of progressive media outlets like this one, you cannot have escaped the prevailing opinion that the Bush administration's latest round of massive tax cuts are folly. But is not just the left which finds them bizarre; almost no reputable economist supports this plan.
Joseph Stiglitz, former chairman of the Council of Economic Advisers, described the tax cuts as leading to "reductions in job growth relative to what they otherwise would be." Speaking to Congress, Federal Reserve Board Chair Alan Greenspan opined that unless there are comparable reductions in Federal spending, the tax cuts will only add to the deficit, which would promote higher interest rates and depress the economy. Alternet contributors David Martin, Chris Hartman and Ben Robinson commented that "the only thing this plan 'stimulates' is more economic inequality in the United States." Even Bush appointee Douglas Holtz-Eakin, head of the Congressional Budget Office, concluded that the proposed tax cuts "might have either a positive or a negative effect on the economy, but that in either case the effect would be modest."
Yet the president and his cronies continue to push the tax cuts. Confronted with a congressional compromise that would reduce the scope of the package to $350 billion (by eliminating the provision to do away with the tax on stock dividends), the President pushed back and asked for $550 billion in cuts. Asked why the Bush administration was pushing for tax cuts when the nation is engaged in a war with a still unknown price tag, and is already facing a record deficit of more than $300 billion in this fiscal year, House Majority Whip Tom DeLay famously responded, "Nothing is more important in the face of war than cutting taxes."
Of course, DeLay's justification made no sense. Similarly, veteran economic observers assert that while tax cuts may have been appropriate when the federal government was running a surplus, it makes no sense to have tax cuts when there is a deficit, particularly when deficits seem likely to continue into the foreseeable future. Greenspan warned that "Budget deficits [lead] directly to higher interest rates" which would depress economic growth.
Many have accused the Bush administration of selling tax cuts as "snake oil," suggesting that they are a universal panacea that will fix whatever ails the economy. But it wasn't long ago that Republicans actually had an economic rationale for cutting taxes. In the eighties, under the Reagan administration, Republicans advocated "supply side" economics where there was a crude logic for tax cuts: reduce the marginal tax rate and thereby motivate people to work harder; this would, in turn, stimulate the economy and, after a few years, the net positive effect would compensate for short-term deficits caused by the reduction in tax rates.
This theory didn't work -- deficits reached record proportions -- but at least the debate was conducted in terms of an economic proposal. Not so today! The Republican appeal for tax cuts is not an economic formula, but rather a political mantra. This is not a plan for the economy; it is a strategy for reelection.
The relentless drive for tax cuts reveals George W. in his true "colors," as an economic and a social conservative. Since he hooked up with Karl Rove, tax cuts have been a prominent feature of every Bush campaign. In his second term as governor he pushed through a steep tax cut (as a result, this year Texas is in dire straits, running a deficit of approximately $10 billion).
Bush and Rove regard tax cuts as a "twofer": a perennially winning issue with Republican ideologues, who on pseudo-moral grounds don't think that the government is entitled to their money. And these same cuts inexorably shrink the size of government, thus accomplishing another goal of the Republican conservative orthodoxy.
Bush doesn't talk directly about his rock-ribbed conservative philosophy but it is lurking in the shadows. In their recent bestseller about Karl Rove, "Boy Genius," Lou Dubose, Jan Reid, and Carl Cannon reported that as governor of Texas, George W. "was much more of an ideologue than he let on ... [observers were] ... stunned by his obsession with privatization." They noted that, "Bush and his team wanted to bury whatever remained of Lyndon Johnson's Great Society."
Veteran political writer Elizabeth Drew recently commented that, "About a year before the 2000 election, Rove made an alliance with the anti-tax lobbyist Grover Norquist, probably the most influential figure in organizing the American Right." This is a partnership based on the shared goals of reducing taxes and shrinking government. In April, when asked about the fiscal crisis facing most of the states, Norquist responded, "I hope a state goes bankrupt ... We need a state to be a bad example, so that the others will start to make the serious decisions they need to get out of this mess."
Conservatives such as Norquist, Rove and Bush believe that social programs, at both the Federal and state level, are unnecessary and therefore a waste of tax money (and therefore if states get into financial trouble they will have to cut these programs).
Americans must not be fooled by Bush propaganda that the proposed tax cuts will magically stimulate the economy or create jobs. This not about the economy, it is about right-wing ideology. These cuts are a stealth initiative to diminish government at all levels: education, healthcare, public safety, aid to elderly and veterans, transportation, protection of the environment, etc. This is intended to starve the Federal budget until all that is left is defense, homeland security, and huge interest payments.
It's not the economy; it's the extreme conservative ideology of George W. Bush and his pandering to that base of his political support.
Bob Burnett is a journalist living in Berkeley. He is the former publisher of In These Times magazine.