[ The Atlanta Journal-Constitution: 01/23/03]
We can thank our children for tax cut
The best way to analyze President Bush's proposed $670 billion tax cut is to ask the most basic question of all: Where's the money going, and where's the money coming from? More bluntly, who wins and who loses?
In this case, the answers to both questions are clear. To finance this tax cut, we would have to borrow enormous sums of money from our children and grandchildren, literally mortgaging their futures without their knowledge or approval. They would be the losers. It's going to come out of their pockets and purses.
Having robbed the future, we would then turn around and give the proceeds of that theft to our wealthiest contemporaries, people today who are already doing considerably better than most of our children ever will. For example, more than a quarter of the proceeds of this intergenerational transfer of wealth would go to the 1 percent of American households with incomes of more than $373,000.
That isn't, or at least shouldn't be, a controversial statement. It's not anti-rich to note such a thing. It's just the plain simple truth, and there's no way around it.
After all, the money to finance the proposed tax cut would not be coming from some revenue surplus that we would be returning to the American taxpayer. No such surplus exists any longer. The $5.6 trillion, 10-year surplus that had been projected when President Bush took office in 2001 has now disappeared like a desert mirage, eaten up by the recession, by increased defense and health-care costs and by a previous Bush tax cut.
The Bush administration itself admits that if its newest tax cut is approved, the budget deficit for 2003 could climb to $300 billion, which in strict dollar terms would be the biggest ever recorded. The administration also concedes that such deficits will continue well into the future. To pay for these tax cuts, we will have to borrow at least $970 billion over the next 10 years, and much higher amounts in the years after that.
And again, the people who would be forced to pay back those loans are today's young adults and children. That price would hit them just as the aging baby boom generation retires, demanding their Social Security payments and health benefits.
Personally, it is hard to conceive of a reason for indebting our children to further enrich people who don't need the money. The only goal that might justify such a policy would be to stimulate the economy enough to drag it out of its current doldrums. The use of deficit spending to that effect is a time-honored tool.
However, liberal and conservative economists agree that, as designed, the Bush tax proposal would be as useless in that effort as a teaspoon in a flood. Even the White House now concedes that even though the tax cut would be retroactive, it will pump only $58 billion into the economy this year, an infinitesimal amount in a $10 trillion economy.
In one sense, the administration's cavalier attitude toward deficits is strange, because it represents a complete reversal of core conservative policy. The crusade for a constitutional amendment requiring a balanced budget has been one of the cornerstones of the right-wing movement as recently as the late to mid-'90s; it helped to bring Newt Gingrich to power as speaker of the House. He and others used to get quite emotional in pointing out that more government borrowing would drive interest rates higher, which in turn would choke off future growth.
But no longer, it seems.
The estimated deficit of $300 billion for 2003, by the way, does not include the cost of a looming war in the Middle East. That would send the deficit considerably higher, but even that's not enough to dissuade the administration from its raid on our children's future. Economists used to warn politicians against what they called a guns-and-butter budget; under this president, it's guns and caviar.
Just send the bill to 2015.
Jay Bookman is the deputy editorial page editor. His column appears Thursdays.