Christmas! Tax cuts ahead! Look out – whatever you do, don’t get between the hogs and the trough. The K Street lobbyists are ginning up a campaign to get big business a bigger slice of the tax-cut pie. In fact, the corporations will take the pie, thanks.
You will not be amazed to learn that the business lobby is ecstatic about the prospect of a $1.6 trillion tax cut. But President Bush’s plan to cut marginal rates across the board, although exceptionally good for rich individuals, does dog for corporations.
And guess who gives big campaign money? The Wall Street Journal notes that the real-estate lobby gave Bush $4.2 million and another $4.3 million to members of the House Ways and Means and the Senate Finance committees this election cycle. Those are the committees that write the tax laws.
The real-estate lobby wants more generous property depreciation laws for office buildings. The insurance lobby, again according to the Journal, gave $1.6 million to Bush and $5.7 million to Ways and Means and Senate Finance. Life insurers want a $645 million provision that would help them compete against other financial services companies. (Ever notice how many television ads these days are about financial services? They are not selling deodorant, widgets or cars. They’re selling “financial security” and “the American dream” and retirement in some beautiful place.)
Those with long memories will recall the education of David Stockman, Ronald Reagan’s first budget director. Reagan started with an across-the-board cut for individuals and wound up with a corporate greedfest that sent the national debt roaring up and interest rates with it. A disillusioned Stockman later said: “The hogs were really feeding. The greed level, the level of opportunism just got out of control.”
The fact is that the portion of the tax burden paid by business in America has been falling steadily for decades. According to Citizens for Tax Justice, during the 1950s and ’60s, business paid about one-fourth of the taxes. Its share is now down to one-10th. That leaves you-know-who to pay the rest.
The major tax lobbyists are hard at work forming a coalition. “The guiding philosophy of that effort is that big business has to unify around one or two big cuts to get the largest possible share. One goal that the trade groups are discussing is a reduction in the current corporate income tax of 35 percent,” reports the Journal.
In a splendid example of cognitive dissonance, the Journal also reports that manufacturing activity plunged in January to levels that are usually seen only when the entire economy is in recession. This would indicate that the anticipated surplus will not, in fact, materialize. And some estimate that the total cost of the bill over 10 years in terms of lost tax revenue and higher interest costs because of the increase in the federal debt could be as much as $2.7 trillion. Unfortunately, everyone predicts that this will be a months-long marathon, which means that whatever passes won’t take effect until next year, leaving the economic wisdom of a tax cut in serious doubt.
Economist James Galbraith of the University of Texas at Austin has suggested that because the Bush presidency is illegitimate (every indication from the recounts so far is that Bush lost Florida), he should not be permitted to do anything that will last beyond his term. That includes a 10-year tax cut that is stacked so that its biggest impact is at the end, when no one has any idea what the economy will look like.
The Bush plan is bad enough: 42.5 percent of his tax cut goes to the richest 1 percent; 60 percent of it goes the richest 10 percent – and these are not people who are hurting. If the D’s sell out and let the business lobby make a bad plan even worse, we will know that the system of legalized bribery that now funds our political system has eaten well into the heart of governance.
I, for one, appreciate the fact that Sen. John McCain is willing to be a pain in the rear about campaign finance reform. He now has a March date for consideration of the McCain-Feingold reform bill and will need the help of every sentient citizen who cares about saving representative democracy.
The good news is that the latest reports show the D’s have surpassed the R’s in soft money: $63 million for the Senate Democrats vs. $43 million for the R’s. That should give Kentucky Sen. Mitch McConnell pause.
Unfortunately, Texas’ own Rep. Tom DeLay, the bug exterminator from Sugar Land, has been lobbying the new president against the bill. The fact is, DeLay wasn’t considered very bright even when he served in the Texas Legislature, where the standards have never been high. Ken Herman of the Austin American-Statesman recently observed of the Legislature: “Some are inspired geniuses mindful only of the greater good; some are connivers mindful only of personal good; most are wondering what’s for lunch.”
Molly Ivins is a former Observer editor and a columnist for the Fort Worth Star-Telegram. Her book with Louis Dubose (Shrub: The Short But Happy Political Life of George W. Bush) is out in paperback. You may write to her at [email protected].