Tax Cutters Party Like It's 1999

By: Holly Sklar

Imagine a couple feeling prosperous enough last spring to plan a large and lavish Christmas party. Imagine that in the months before Christmas, they suffered a layoff and their child was beaten up, requiring costly long-term treatment. Should they go ahead with the party and pay for it by wiping out their savings, dropping their health insurance and maxing out their credit cards? Of course not.

Congress and the President were feeling so flush last May from ten years of economic growth, they enacted lavish tax cuts for the wealthiest Americans. The budget surplus was supposedly so big, we could shrink government revenues, protect Social Security and still have plenty for needed services.

Critics who said the tax cutters were cooking the books were right, and now the surplus has gone the way of Enron stock. It turned out that a recession had already begun in March, before the tax bill passed. The government couldn't see the present, much less predict the future.

By August, nearly 30 states were cutting previously made appropriations, according to the National Association of State Budget Officers. Feeling flush, many states had cut taxes. Now they are cutting vital programs from health care to education, despite rapidly rising unemployment.

The September terrorist attacks devastated lives and businesses. In October, the economy tanked further and the anthrax attacks exposed the inadequacy of the public health system to handle a noncontagious bioterrorist attack, much less a contagious disease like small pox.

Instead of admitting they were wrong, the tax cutters wrapped themselves in the flag of economic stimulus. The House passed a stimulus package stuffed with budget-busting gifts for wealthy individuals and corporations, which have long been on the lobbyists' wish lists. Giving stimulants to wealthy campaign donors is a habit Congress must break.

Bush Budget Director Mitch Daniels says the federal government will run budget deficits at least until 2004. Instead of trimming the tax cuts, the administration plans deep cuts in non-defense spending.

If the Bush administration were rewriting "A Christmas Carol", Scrooge wouldn't change his ways. He would be rewarded with tax cuts.

Hunger and homelessness are up sharply, according to a new report by the U.S. Conference of Mayors. Requests for emergency food assistance jumped an average 23 percent over the last year and requests for emergency shelter assistance rose 13 percent in the 27 cities surveyed. Families with children are 40 percent of the homeless population. More than one-third of adults requesting food assistance are employed, as are one-fifth of the homeless. According to the Mayors' report, "Low-paying jobs lead the list of causes of hunger identified by city officials. Other causes cited, in order of frequency, include unemployment and other employment-related problems, high housing costs, changes in the food stamp programs, poverty or lack of income, economic downturn or weakening of the economy, utility costs, welfare reform, medical or health costs, and mental health problems". Lack of affordable housing, followed by low-paying jobs, leads the causes of homelessness.

Emergency food and shelter providers are turning people away because they cannot keep up with the rising demand. Hunger and homelessness are expected to rise in 2002.

What kind of democracy would go ahead with tax breaks for the best off at the expense of the hungry and homeless?

The tax cuts for upper-income Americans are mostly scheduled to take effect after 2001. The post-2001 tax cuts enacted in May would mean an average tax cut of just $10 for those in the poorest 20 percent, $194 for those in the middle, nearly $7,000 for those in the top 10 percent and $50,000 for those in the top 1 percent. We simply cannot afford billions in giveaways to the nation's millionaires and billionaires.

For most Americans, the post-2001 tax cuts "offer little gain, but lots of pain", said Citizens for Tax Justice Director Robert McIntyre. "That's because most people will get little more in tax reductions after the first year, while losing large amounts in public services as the remaining upper-income tax cuts are phased in."

It's time to call off the lavish tax-cut party instead of cutting vital services like health care, housing assistance, job programs, environmental protection and education.

We couldn't stop the terrorist attacks. Let's not compound them with a disaster of our own making.