October 14
October 14, 2008October 16
October 16, 2008Dear Editor:
When George W. Bush was running for president, I asked a billionaire businessman friend of mine why he was supporting Bush. My friend is very bright, and Bush was advocating disastrous policies.
The answer I got – “Eamon, there is simply too much money on the table” – has a different context today. As we know, the net result of Bush’s policies was to eliminate the annual budgetary surplus generated during the Clinton administration and to increase the national debt by over 50 percent, from $5.7 trillion to $8.8 trillion.
The financial “bailout” is the end result of those policies. But the economic story started by George W. Bush is not over yet – and the next chapter could be written by Sen. John McCain.
It is interesting what running for president can do to a person. In 2001 and 2003, the straight-talking McCain opposed the Bush tax cuts, arguing that they came at the expense of lower and middle income Americans and were too costly anyway in a time of war.
In 2008, candidate McCain is proposing even greater tax cuts for the wealthiest Americans, despite the fact that the Iraq war is not over and has not been paid for. The ultimate cost of his tax plan could reach $7 trillion, if fully implemented.
That is the conclusion of the non-partisan Tax Policy Center, which compared the tax plans of both presidential candidates. They concluded that McCain’s tax plan would primarily benefit those with very high incomes, raising their after-tax incomes by more than twice the average for all households.
Sen. Barack Obama’s tax cut proposal would cut taxes by greater amounts than McCain for all families earning less than $250,000 a year, or for over 85 percent of the country. For Americans making over $250,000, Obama would return their tax rates to the 2000 level, which was less than that under the senior President Bush.
In dollar terms, McCain would cut taxes for the top 1 percent of incomes by $125,000, while Obama would raise their taxes by around $19,000.
A key question is how the candidates intend to pay for or offset these revenue reductions.
Cutting discretionary programs for education, environment, science, and other areas wouldn’t begin to close the gap, though it would deprive the public of the benefits of those programs. To achieve the cuts needed to pay for his tax plan without exploding the debt, there is only one other target: the large entitlement programs such as Medicare and Social Security.
The fiscal “bailout” will require change, but we need to remember where the candidates wanted to take us to begin with. The Tax Policy Center concluded that “the two candidates’ tax plans would have sharply different distributional effects.” That is an understatement, and the American public needs to know just what those effects would be before they enter the voting booth on Nov. 4.
Dr. Eamon Kelly,
President Emiritus, Tulane University
