READING BETWEEN THE LINES
By Lance Selfa | January 17, 2003 | Page 4
IF THERE'S one thing you can count on, it's that the Bush administration will always find a way to give government assistance to the rich--and try to make it look like they're giving it to ordinary people.
The latest gambit is Bush's so-called $674 billion "stimulus package," pitched as a means to help out the unemployed and people "living from paycheck to paycheck." But even the Bush spin machine couldn't hide the real beneficiaries of the package--the richest 1 percent of the population who face the "burden" (horror or horrors!) of "double taxation" on their stock dividends. The Bush plan called for about $7 billion in aid to the unemployed, while setting aside almost half a trillion dollars for those poor coupon clippers.
Just about every economic analysis of the plan shows that "typical" taxpayers will get little or nothing in comparison with the richest Americans. About 64 percent of the benefits of eliminating the tax on dividends will flow to the wealthiest 5 percent of taxpayers, according to the Urban Institute-Brookings Tax Center.
The wealthiest 1 percent of taxpayers--those making more than $1 million a year--will see their taxes decline by an average of $32,000, according to the Citizens for Tax Justice. Those making $21,000 a year will receive a whopping $47, the Tax Policy Center estimates.
Despite all the administration propaganda about its benefits to a "nation of stockholders," the plan won't even apply to the more than 40 million Americans who own stock through tax-free retirement accounts. And even the claims about the "immorality" of "double taxation"--corporations pay taxes on profits, and stockholders pay taxes on dividends generated from those profits--don't hold up.
As newly appointed Treasury Secretary John Snow knows all too well, corporations play all sorts of ruses to avoid paying taxes. When Snow was boss of CSX, the shipping giant didn't pay taxes on its profits in three of the last four years.
Like so much of what the Bush administration does, the "stimulus plan" is based on a set of lies, told over and over. And the biggest lie of all is that this plan is concerned with stimulating the economy. In fact, it's the opening bid of Bush's attempt to rewrite to tax code to shift taxes from capital to labor--from corporations and the rich to ordinary people.
"It's tax reform, rather than economic stimulus," Kevin Hassett of the American Enterprise Institute, a conservative think tank, told the Detroit Free Press. "Hassett is exactly right," said Lawrence Mishel of the liberal Economic Policy Institute. "This has nothing to do with creating jobs or fixing the economy in 2003. This is about lowering taxes--and permanently. This is a move to eliminate taxes on capital and only tax wages."
Not only does Bush's proposal cut taxes on the rich, it also aims to push the government further into debt so that it will be forced to cut back on essential programs. That's okay with Bush and the Republicans because they have even bigger plans to privatize huge government programs like Social Security and Medicare.
Bush can be so arrogant in proposing an open giveaway to the rich because the Democrats in Congress have failed to challenge all of the other giveaways he pushed in his first two years. This time, they're pledging that they won't be pushovers. But don't hold your breath.
The alternate proposal they put up--a $136 billion tax cut package--may be closer to a genuine stimulus package. But it actually promises to give less tax relief to many people with lower and middle incomes than Bush's plan, according to the New York Times.
And Democrats aren't making clear what Bush really wants to do. Instead of countering Bush's scheme to privatize Medicare with a genuine plan for national health insurance, they're raising concerns about the growing budget deficit to show how "fiscally responsible" they are.
If the Democrats and their allies in organized labor continue down that road, Bush will already have won the debate.