The Case for Killing Bush's Tax Cuts for the Rich

Two GOP ghosts bravely argue for fiscal responsibility.

By Donald Kaul

Things in Washington these days are beginning to look a lot like Dickens' A Christmas Carol: Two ghosts from Republican administrations past have risen from political Palookaville to rattle their chains and issue dire warnings to their former colleagues.

"Change your ways, "they're telling conservatives, "lest you wind up like us, doomed to wander the op-ed pages of America, despised and ignored as you issue unheeded advice."

Or words to that effect.

Within the past month or so both David Stockman, Ronald Reagan's director of the Office of Management and Budget, and Alan Greenspan, former chairman of the Federal Reserve, have issued stern admonitions against continuing the George Bush tax cuts of 2001 and 2003.

Imagine that, two famous (or infamous) Republican conservatives arguing FOR taxes. The next thing you know, Dick Cheney will find a war he doesn't like.

Here's the way it all came about:

Back in 2001 and 2003 the Bush administration pushed through a program of tax cuts that mainly benefited the rich and kind-of-rich, over the objections of liberals who felt the cuts would balloon the deficit.

Since the disastrous effect on the deficit tended to be long-term, rather than short, the Bushers cleverly made the tax cuts short-term. The cuts were set to expire at the end of 2010, long after Bush had left office, leaving his successors to deal with the mess.

Well, we're getting to the end of 2010, and President Obama is dealing with the mess by saying that he's ready to let the tax cuts die a natural death (except for the ones affecting people who make under $250,000 a year).

This has outraged Republicans, who believe taxes are an anti-American plot to keep rich people from getting even richer. The renewed taxes will be the last rock in the boat of a sinking economy, they say. The lights will go out all over America, they say, and will not be lit again in our lifetime.

Or words to that effect.

Which is what makes the statements by Stockman and Greenspan so deliciously ironic. These guys are hardcore deficit hawks. They don't suffer taxes gladly. Yet here they are, siding with Obama on cancelling the Bush tax cuts.

"I'm in favor of tax cuts," Greenspan said, "but not with borrowed money. Our choices right now are not between good and better; they're between bad and worse."

For the record, he's in favor of getting rid of all the tax cuts, for rich and poor alike. And he'd like to see expenditures cut, which means of course cutting benefits near and dear to Democratic hearts.

Stockman, on the other hand, puts the blame for our sorry fiscal state on Republicans.

While the neo-cons in the Republican party were "pushing the military budget skyward, "he wrote, "the Republicans on Capitol Hill, who were supposed to cut spending, exempted from the knife most of the domestic budget--entitlements, farm subsidies, education, water projects.

"But in the end it was a new cadre of ideological tax-cutters who killed the Republicans' fiscal religion."

Formerly conservative Republicans became sold on "the delusion that the economy will outgrow the deficit if plied it with enough tax cuts."

It isn't a pretty picture. Traditionally we depended on Democrats to take care of people in need and on Republicans to make sure we didn't go broke doing it.

That system has dissolved in chaos. There's no one minding the store and we're going broke anyway.

I'm all for letting the tax cuts lapse--we need the money--but don't think for a minute that it will solve things. There aren't enough rich people to balance the budget (only 2 percent of households make $250,000 a year), and--if there were--they'd hire accountants who would figure out a way to avoid the new taxes.

But why not look on the bright side? We're not Greece, after all, and if Stockman and Greenspan are right we won't be--for another five years.

Have a nice day.