Pioneer Editorial: Tax cuts now leaves bigger bill in future
The U.S. House again on Wednesday voted to widen the federal deficit by giving tax breaks to the wealthy and crumbs to the middle income.
The Republican-led House's mantra for tax cuts continues, giving President Bush an election year victory to campaign this fall, saying he and the GOP Congress delivered tax cuts.
Now there's nothing wrong with tax cuts -- we all want a little more check at the end of the month. But what worries us is the bill our children and grandchildren will get, plus that the majority of those getting the tax breaks don't need them. According to the Tax Policy Center, a joint venture of the Urban Institute and Brookings Institution, the tax cuts approved by the House and now awaiting Senate action will give an average federal tax cut of $42,766 to families with incomes of more than $1 million, while families with an income between $40,000 and $50,000 would get a $47 cut.
And while those tax cuts were extended five years, changes to the alternative minimum tax -- originally targeted to make sure the wealthy pay some taxes but has instead hit more middle income families -- was only extended through this year.
In all, the tax cuts will add $70 billion to the federal deficit over the next five years.
The premise is simple -- by cutting taxes, the extra money will grow the economy, eventually yielding more tax revenue. But that's been tried before, leading to the gargantuan budget deficits of the late 1980s and early 1990s. There's a missing ingredient -- cutting enough spending to balance tax cuts.
Congress will say it did that. But what's wrong with this picture? Congress cut $39 billion in benefits, most of which comes from programs for the poor such as Medicaid, while it now cut taxes $70 billion, nearly half of that going to individuals making $1 million or more.
There is no doubt that spending cuts should come first, before cutting revenues. But what of the billions of dollars in pork spending each member of Congress slices out for themselves? And the continuing hundreds of billions for the war in Iraq and Afghanistan that isn't even considered part of the budget?
Rather than doling out tax cuts disproportionately, a break needs to be put on spending but by prioritizing spending so that our most vulnerable are taken care of. Giving the president line-item veto authority would be a step, so that pork spending can be controlled. And being honest about our defense spending for the War on Terror would also help. Putting it in the budget will show a need for the revenues that Congress is so willing to get rid of now.
The first President Bush once called such tax cuts without accompanying spending cuts "voodoo economics." It still is.