Prometheus 6   

Stealing From Our Children

I can't improve on the editorial's title.

October 6, 2003

President Bush credited his tax cuts Friday for creating 57,000 new jobs in September and mocked congressional provisions for allowing his tax cuts to expire in a few years, declaring "the government giveth, and the government taketh away." He demanded again that Congress make all of the cuts permanent. This year's projected deficit of a half-trillion dollars could look puny if Bush succeeds, especially in light of yet another round of tax-slashing.

The administration's tax cuts are the economic equivalent of steroids; they may quickly pump up the economy, but the long-term effect on fiscal health will be dire.[P6: And, like steroids, too much won't even pump you up; it'll kill you]

The Congressional Budget Office is projecting a possible deficit over the next decade of $4.4 trillion. At the same time, the baby boom generation will be retiring. That alone, warns Comptroller General David M. Walker, is a financial challenge "unprecedented in the history of our nation." Congress' response? New tax cuts for business.

The Senate Finance Committee approved a bill Wednesday that would provide a windfall to U.S. companies that have avoided taxes on foreign profits by keeping them abroad. The legislation would give companies a one-time amnesty to repatriate about $400 billion at a tax rate of 5.25%. Companies that parked profits overseas would be rewarded, whereas those that created jobs in the United States would get stuck with a much higher rate on profits. Initially, it would look as though the budget deficit were being reduced because of the speedy return of the money, but the Joint Committee on Taxation estimates that the Treasury Department would lose $3.7 billion in taxes over 10 years. Farmers, movie producers and gas and oil companies would also get new tax breaks.

In what amounts to a "leave no corporation behind" bill, Rep. Bill Thomas (R-Bakersfield) is pushing legislation that is similar to the Senate plan and contains a variety of other tax breaks for corporations and manufacturers. Thomas will claim with a straight face that many of these tax cuts, like the ones that came before, are merely temporary, so their projected effect on the deficit will be minimized. It is still a choking amount: Thomas' proposal, coupled with recently approved pension-related tax cuts, would cost $176 billion through 2013, according to the liberal Center on Budget and Policy Priorities.