In My Opinion: Enriching the Rich While the Rest Struggle

For many of us, talk of taxes and budgets and figures in the trillions of dollars tends to make our eyes glaze over.

But bear with me. Something big is going on in the looming debate over the Bush tax plan for the super-rich and its impact on programs that are important to average families — programs like Social Security, Medicare and Medicaid, and jobless benefits, education and human services funding at the state level.

Let’s recall that President Bush originally campaigned for a big tax cut during flush times, when huge federal budget surpluses were projected for at least a decade and our government for the first time in years was paying down the national debt. He pushed for and won last year a $1.3 trillion tax cut — weighted most generously toward the top 1 percent of tax payers — on the basis that the extra money should go back in our pockets rather than to more government programs.

But then the dot-com stock bubble burst, the economy slowed, and finally the horror of Sept. 11 brought crises in the airline and insurance industries and put tens of thousands out of work. Federal spending soared to fight terrorism and fund new domestic security programs, and budget surplus projections melted like an ice cube in July.

However, Bush and the congressional Republicans were undeterred in their zeal to reward their wealthy and corporate supporters. They pushed through more tax breaks earlier this year in the form of corporate welfare, calling it an “economic stimulus.” As a result, corporate taxes are at the second lowest level in 60 years.

Attempting to bring these issues into focus for the average family, economist Paul Krugman writes about “wealth versus health” in his New York Times column. He notes that soaring health care costs are putting sharp pressure on federal Medicare and state Medicaid programs. But no resources are available to meet health care needs because of plans for more tax cuts.

Krugman notes: “Last year the administration claimed that it could easily cut taxes without tapping the Social Security surplus. Those claims were false, but Sept. 11 provided cover: who cares about lockboxes when we’re in pursuit of evildoers?”

Meanwhile, state budgets are flooded with red ink because of the war and recession — a problem compounded by the Bush tax program. The federal government has been cutting back on block grants for state programs because of shrinking revenues, and states will soon feel the impact of the repeal of estate taxes, which they share with the federal government.

Forty-three states are now looking at budget deficits this year, and will be forced to either cut programs or raise state taxes, or both, according to the National Conference of State Legislatures. (Nearly every state is required to operate within budget, unlike the federal government.) One of the biggest problems is funding Medicaid, where costs have risen 14 percent, and ensuring needed coverage of children. Some states are slowing or cutting education spending as well as human services programs, at a time of high unemployment when safety net programs are most vital.

All the while, federal tax cuts are accelerating for the super-wealthy and major corporations and will continue to do so through 2010, wiping out budget surpluses and causing the government to fund programs out of the Social Security trust fund. And this tax relief isn’t going to working class families.

Four out of every five Americans — the middle class and lower income families — have already received most of the tax breaks they’re going to get from the Bush program. Future cuts are earmarked for wealthiest taxpayers, with fully 52 percent of tax gains going solely to the richest 1 percent. Average income for the top 1 percent is $1,137,000.

Senator Edward Kennedy very sensibly has sponsored a bill to moderate the tax cut, scrapping future reductions for the very top income levels and dropping the scheduled repeal of the estate tax, instead exempting all but the largest 0.3 percent of estates. That would keep tax relief for working Americans while also preserving funds to bolster the states and needed social programs.

However, Bush and House GOP leaders are having none of that, and instead are looking for even bigger giveaways for their rich friends. While the Bush tax program was designed to “sunset” in 2010, the House of Representatives recently voted to make it permanent — a move that would cost the Treasury at least $4 trillion during the subsequent decade, when the Social Security system comes under pressure from the Baby Boom retirements.

The only reason that the Senate probably won’t follow suit is that the Democrats won narrow control of the Senate with the Jim Jeffords party switch, and their leader, Tom Daschle, has vowed to keep the issue off the floor.

After the House vote, Democratic Leader Dick Gephardt predicted that the tax/budget debate will be the defining issue for this November’s elections. I would agree, assuming that we can make the issue, and the stakes, understandable to voters. Behind this debate lie two sharply different visions of the role of government in our lives.