President Bush today crowed over the "success" of having given the wealthy a pass on financing his rapidly growing national debt.
"Cutting your taxes worked," Bush said. "Unfortunately, the Democrats are still determined to raise your taxes, and if they gain control of the Congress, they can do so without lifting a finger."
Bush said taxes are a huge issue in the Nov. 7 election. He said the tax cuts orchestrated by his administration have left more money in the hands of workers, families and small businesses — money they have used to sustain a bustling economy.
Actually, the vast bulk of the GOP's tax cuts went to the GOP's "base": the millionaires and billionaires. Workers, families and small businesses got the crumbs of the tax relief cake ... if anything.
Tax Cuts for "the haves and the have mores"
When President Bush goats, "You're my base: the haves and the have mores," when talking to a roomfull of the wealthiest people in America — the Republicans' fundraising base — it's should be no surprise to anyone but the news media that average folks like you and me have not seen much upside from tax relief for the Donald Trumps and Paris Hiltons of the world.
People in the top 20 percent of incomes, averaging $182,700 a year, saw their share of federal taxes decline from 65.3 percent of total payments in 2001 to 63.5 percent this year, according to the study by congressional budget analysts.
In contrast, middle-class taxpayers — with incomes ranging from $51,500 to $75,600 — bear a greater tax burden. Those making an average of $75,600 had the biggest jump in their share of taxes, from 18.5 percent of all payments in 2001 to 19.5 percent this year.
$197 Billion in Tax Cuts to Top 1% of US Taxpayers as Big as States’ Budget Shortfalls of $200 Billion
...The report identifies five main areas of shifting tax burden:
FEDERAL TO STATE — a 15% shift in tax burden between 2000 and 2003
PROGRESSIVE TO REGRESSIVE — at the federal level, a 17% decline in the share of revenue from progressive taxes and a 135% increase in the share of revenue from regressive taxes since 1962
WEALTH TO WORK — A tax cut on unearned income — such as inheritance or investment — of between 31% and 79%, but a tax hike on work income of 25% since 1980
CORPORATIONS TO INDIVIDUALS — a 67% drop in the share of federal revenues contributed by corporations and a 17% rise in individuals’ share
CURRENT TAXPAYERS TO FUTURE GENERATIONS — record deficits that shift the tax burden to our children and grandchildren
“When President Bush and Congress trumpet, ‘Here’s a tax cut', we say, ‘Taxpayer beware!’ said Chuck Collins, United for a Fair Economy co-founder. “Unless you are super-rich, it’s a tax SHIFT, not a cut. Non-wealthy taxpayers will pay for these tax cuts with increased state and local taxes or cuts in public services.”
- Over the ten-year period, the richest Americans—the best-off one percent—are slated togwb0602a.gif - 10559 Bytes receive tax cuts totaling almost half a trillion dollars. The $477 billion in tax breaks the Bush administration has targeted to this elite group will average $342,000 each over the decade.
- By 2010, when (and if) the Bush tax reductions are fully in place, an astonishing 52 percent of the total tax cuts will go to the richest one percent—whose average 2010 income will be $1.5 million. Their tax-cut windfall in that year alone will average $85,000 each. Put another way, of the estimated $234 billion in tax cuts scheduled for the year 2010, $121 billion will go just 1.4 million taxpayers.
- As a result, freezing the Bush tax cuts at their 2002 levels would have little or no effect on 99 percent of the taxpayers, whose tax cuts are already mostly or completely “frozen.” Only the best-off one percent of the taxpayers will receive significant additional tax cuts if the rest of the Bush tax program continues to be implemented.
The Spiraling National Debt Threatens the Economy
If the government still is running big budget deficits when businesses are trying to borrow money to expand, then companies could find themselves competing for funds with Washington, an effect economists call "crowding out."
According to a Federal Reserve study in May 2003, interest rates could rise a quarter percentage point for every projected one-point increase in the ratio of the federal deficit to gross domestic product. A big jump in interest rates would put the brakes on the economy by raising the cost of borrowing.
More recently, former Treasury Secretary Robert Rubin, the International Monetary Fund and other critics have warned big deficits could fuel higher interest rates and financial disruption.
The notion that what amounts to reckless credit-card spending on the part of Bush and the Republican Congress might actually not make good economic sense is something the Republicans don't want to hear. Instead, they continue to claim that if the wealthy are more well-to-do, then the rest of us will benefit. How is always vague. Bigger tips for waitresses? More demand for limousine drivers and shoeshine boys? More positions for nannies, maids and gardeners? Yes, giving the wealthy yet more tax advantages could definitely benefit the servant class.
But what about working families?
Slowdown is Here Already. Is the Remedy More of the Same?
And now, despite the escalating speculation of the investor class in the stock market, the economy is stalling:
Commerce Department reported Friday that economic growth during the July-to-September period clocked in at an annual rate of just 1.6 percent — a subpar performance that mostly reflected the deepening housing slump. Investment in homebuilding was cut by the largest amount in 15 years.
The cause? A record drop in the housing market:
Economic growth in the third quarter was well below Wall Street forecasts for a 2.2 percent increase and reflected a range of influences that combined to slow the economy.
The report showed a striking 17.4 percent annual rate of decrease in spending on new housing - the biggest decline in 15-1/2 years.
In addition, growth in business spending on inventories slowed to only a $50.7 billion rate, subtracting 0.1 percentage point from GDP growth, and the value of imported goods accelerated sharply to a 7.8 percent annual rate of increase in the third quarter, more than three times the second quarter's 1.4 percent increase.
If the economy is doing so well, why are so many families having their mortgages foreclosed and their homes taken away? Why can't people afford to live at the level they did just a few years ago?
By contrast, the GDP report showed business investment remained healthy and consumers picked up their spending pace.
Nonresidential investment, which measures business spending, rose at an 8.6 percent annual rate in the third quarter, close to double the second quarter's 4.4 percent. Consumer spending, which accounts for roughly two-thirds of national economic activity, increased at a 3.1 percent rate, up from 2.6 percent in the second quarter.
Yes, but where are these companies investing? Malaysia? India? China?
Meanwhile, how are consumers paying for all their spending? Credit cards? Borrowing against the homes they cannot sell?
Passing Debt on to Others (i.e., your children)
|The Gross National Debt|
Maybe it's time we measured economic vitality on more than Dick Cheney's investment portfolio.