[Mb-civic] OP-ED COLUMNIST Bush's Class-War Budget By PAUL KRUGMAN

[Michael Butler]

 The New York Times
February 11, 2005
OP-ED COLUMNIST
Bush's Class-War Budget
By PAUL KRUGMAN

It may sound shrill to describe President Bush as someone who takes food
from the mouths of babes and gives the proceeds to his millionaire friends.
Yet his latest budget proposal is top-down class warfare in action. And it
offers the Democrats an opportunity, if they're willing to take it.

First, the facts: the budget proposal really does take food from the mouths
of babes. One of the proposed spending cuts would make it harder for working
families with children to receive food stamps, terminating aid for about
300,000 people. Another would deny child care assistance to about 300,000
children, again in low-income working families.

And the budget really does shower largesse on millionaires even as it
punishes the needy. For example, the Center on Budget and Policy Priorities
informs us that even as the administration demands spending cuts, it will
proceed with the phaseout of two little-known tax provisions - originally
put in place under the first President George Bush - that limit deductions
and exemptions for high-income households.

More than half of the benefits from this backdoor tax cut would go to people
with incomes of more than a million dollars; 97 percent would go to people
with incomes exceeding $200,000.

It so happens that the number of taxpayers with more than $1 million in
annual income is about the same as the number of people who would have their
food stamps cut off under the Bush proposal. But it costs a lot more to give
a millionaire a break than to put food on a low-income family's table:
eliminating limits on deductions and exemptions would give taxpayers with
incomes over $1 million an average tax cut of more than $19,000.

It's like that all the way through. On one side, the budget calls for
program cuts that are small change compared with the budget deficit, yet
will harm hundreds of thousands of the most vulnerable Americans. On the
other side, it calls for making tax cuts for the wealthy permanent, and for
new tax breaks for the affluent in the form of tax-sheltered accounts and
more liberal rules for deductions.

The question is whether the relentless mean-spiritedness of this budget
finally awakens the public to the true cost of Mr. Bush's tax policy.

Until now, the administration has been able to get away with the pretense
that it can offset the revenue loss from tax cuts with benign spending
restraint. That's because until now, "restraint" was an abstract concept,
not tied to specific actions, making it seem as if spending cuts would hurt
only a few special interest groups.

But here we are with the first demonstration of restraint in action, and
look what's on the chopping block, selected for big cuts: the Centers for
Disease Control and Prevention, health insurance for children and aid to law
enforcement. (Yes, Mr. Bush proposes to cut farm subsidies, which are truly
wasteful. Let's see how much political capital he spends on that proposal.)

Until now, the administration has also been able to pretend that the budget
deficit isn't an important issue so the role of tax cuts in causing that
deficit can be ignored. But Mr. Bush has at last conceded that the deficit
is indeed a major problem.

Why shouldn't the affluent, who have done so well from Mr. Bush's policies,
pay part of the price of dealing with that problem?

Here's a comparison: the Bush budget proposal would cut domestic
discretionary spending, adjusted for inflation, by 16 percent over the next
five years. That would mean savage cuts in education, health care, veterans'
benefits and environmental protection. Yet these cuts would save only about
$66 billion per year, about one-sixth of the budget deficit.

On the other side, a rollback of Mr. Bush's cuts in tax rates for
high-income brackets, on capital gains and on dividend income would yield
more than $120 billion per year in extra revenue - eliminating almost a
third of the budget deficit - yet have hardly any effect on middle-income
families. (Estimates from the Tax Policy Center of the Urban Institute and
the Brookings Institution show that such a rollback would cost families with
incomes between $25,000 and $80,000 an average of $156.)

Why, then, shouldn't a rollback of high-end tax cuts be on the table?

Democrats have surprised the Bush administration, and themselves, by
effectively pushing back against Mr. Bush's attempt to dismantle Social
Security. It's time for them to broaden their opposition, and push back
against Mr. Bush's tax policy.

E-mail: krugman at nytimes.com

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