want to share a fantasy with you. Trust me:
it will explain everything you need to know
about the budget debate.
a world in which the tax law doesn't mandate
any future tax cuts - absent further legislation,
tax rates will stay the same as they are today.
Any future changes in rates will require new
my fantasy world, there's a budget deficit,
just as in reality. Deficits also appear likely
for the next few years, with somewhat iffy
projections of a return to surpluses later
in the decade. Just about all of those projected
surpluses come from Social Security. In short,
the fiscal outlook is tolerable but not great.
suppose - still in my fantasy world - that
the administration comes along and proposes
a huge new round of tax cuts. These tax cuts
aren't temporary measures designed to boost
the economy - on the contrary, they are permanent
cuts that grow over time. Many of the proposed
tax cuts won't take place until 2005 or 2006;
some won't take effect until 2010.
proposed tax cuts are also heavily tilted
toward the wealthy. Two-thirds of the population
would receive nothing at all; well over half
of the total goes to people earning more than
$200,000 per year.
pretty clear that most voters, if presented
with this proposal right now, would be strongly
opposed, even outraged.
of course in the real world those future tax
cuts - which are exactly the way I've described
them - aren't being proposed now. Instead,
they were smuggled into last spring's tax
bill. That doesn't make the prospective tax
cuts any less outrageous; but it does make
it easier for the public to become confused
about what's at stake. And everything the
Bush administration says about taxes in the
next few weeks will be designed to maximize
that public confusion.
administration officials will claim that people
who want to cancel future tax cuts want to
raise taxes. This is like George W. Bush's
claim that the Enron chairman, Kenneth Lay,
supported Ann Richards in the Texas governor's
race (he did give Ms. Richards some money
- but he gave Mr. Bush much more). That is,
you can try to rationalize it with fancy word
play - not cutting taxes is raising them from
what they would otherwise have been, right?
But it sure feels like a lie.
they will throw up a smokescreen of confusing
figures to hide the agreed fact that tax cuts
are a major reason for the abrupt collapse
of the projected surplus. Let me repeat the
words "agreed fact." Recently four independent
projections were made of the budget surplus
over the next decade: one each from the Democratic
and Republican staff of the House and Senate.
All four projections marked down previous
surplus estimates by two-thirds; all four
attributed about 45 percent, or $1.7 trillion,
of the decline to the tax cut. Everyone expects
the estimates that the nonpartisan Congressional
Budget Office will release tomorrow to look
they will claim that the future tax cuts are
just what the doctor ordered to deal with
the current recession. The C.B.O. disagrees;
it declared, in a recent report, that accelerating
those tax cuts would be ineffective as a stimulus
measure. And if tax cuts now are ineffective,
tax cuts later are even less effective.
the administration will try to convince you
that the return of deficits won't hurt you
personally. But for millions of Americans
deficits will soon began to pinch, hard.
case in point: Just a few days ago a bipartisan
panel recommended increases in Medicare payments,
warning that a failure to raise them would
jeopardize access to care for the elderly
and disabled. Indeed, over the last few years
many H.M.O.'s have either pulled out of Medicare
or sharply raised co-payments, causing thousands
of retirees to lose benefits; in some cases
cancer patients have been forced to cancel
chemotherapy. But though in the past Congress
has usually followed the panel's recommendations,
congressmen are now doubtful whether they
can provide more money "in the current budgetary
environment." That shrieking you hear is the
sound of Medicare patients being denied coverage
to make room for tax cuts.
the chest-thumping you hear is the sound of
an administration trying to prevent any rational
discussion of the fiscal mess its tax plan
2002 The New York Times Company
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