Dooh Nibor Economics
June 1, 2004
By PAUL KRUGMAN
Last week The Washington Post got hold of an Office of
Management and Budget memo that directed federal agencies
to prepare for post-election cuts in programs that George
Bush has been touting on the campaign trail. These include
nutrition for women, infants and children; Head Start; and
homeland security. The numbers match those on a computer
printout leaked earlier this year - one that administration
officials claimed did not reflect policy.
Beyond the routine mendacity, the case of the leaked memo
points us to a larger truth: whatever they may say in
public, administration officials know that sustaining Mr.
Bush's tax cuts will require large cuts in popular
government programs. And for the vast majority of
Americans, the losses from these cuts will outweigh any
gains from lower taxes.
It has long been clear that the Bush administration's claim
that it can simultaneously pursue war, large tax cuts and a
"compassionate" agenda doesn't add up. Now we have direct
confirmation that the White House is engaged in bait and
switch, that it intends to pursue a not at all
compassionate agenda after this year's election.
That agenda is to impose Dooh Nibor economics - Robin Hood
in reverse. The end result of current policies will be a
large-scale transfer of income from the middle class to the
very affluent, in which about 80 percent of the population
will lose and the bulk of the gains will go to people with
incomes of more than $200,000 per year.
I can't back that assertion with official numbers, because
under Mr. Bush the Treasury Department has stopped
releasing information on the distribution of tax cuts by
income level. Estimates by the Urban Institute-Brookings
Institution Tax Policy Center, which now provides the
numbers the administration doesn't want you to know, reveal
why. This year, the average tax reduction per family due to
Bush-era cuts was $1,448. But this average reflects huge
cuts for a few affluent families, with most families
receiving much less (which helps explain why most people,
according to polls, don't believe their taxes have been
cut). In fact, the 257,000 taxpayers with incomes of more
than $1 million received a bigger combined tax cut than the
85 million taxpayers who make up the bottom 60 percent of
the population.
Still, won't most families gain something? No - because the
tax cuts must eventually be offset with spending cuts.
Three years ago George Bush claimed that he was cutting
taxes to return a budget surplus to the public. Instead, he
presided over a move to huge deficits. As a result, the
modest tax cuts received by the great majority of Americans
are, in a fundamental sense, fraudulent. It's as if someone
expected gratitude for giving you a gift, when he actually
bought it using your credit card.
The administration has not, of course, explained how it
intends to pay the bill. But unless taxes are increased
again, the answer will have to be severe program cuts,
which will fall mainly on Social Security, Medicare and
Medicaid - because that's where the bulk of the money is.
For most families, the losses from these cuts will far
outweigh any gain from lower taxes. My back-of-the-envelope
calculation suggests that 80 percent of all families will
end up worse off; the Center on Budget and Policy
Priorities will soon come out with a more careful, detailed
analysis that arrives at a similar conclusion. And the only
really big beneficiaries will be the wealthiest few percent
of the population.
Does Mr. Bush understand that the end result of his
policies will be to make most Americans worse off, while
enriching the already affluent? Who knows? But the
ideologues and political operatives behind his agenda know
exactly what they're doing.
Of course, voters would never support this agenda if they
understood it. That's why dishonesty - as illustrated by
the administration's consistent reliance on phony
accounting, and now by the business with the budget cut
memo - is such a central feature of the White House
political strategy.
Right now, it seems that the 2004 election will be a
referendum on Mr. Bush's calamitous foreign policy. But
something else is at stake: whether he and his party can
lock in the unassailable political position they need to
proceed with their pro-rich, anti-middle-class economic
strategy. And no, I'm not engaging in class warfare. They
are.
http://www.nytimes.com/2004/06/01/opinion/01KRUG.html?ex=1087089946&ei=1&en=ead1839533e7482a
Copyright 2004 The New York Times Company
