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The Honolulu Advertiser

Posted on: Sunday, May 13, 2001

Bush tax cut victory: What he really won

One way of looking at the passage by Congress of President Bush's $1.35 trillion tax cut is the way Bush describes it, a victory for taxpayers. It's their money; they deserve to get it back.

Another way is to fret about whether the tax cut will benefit the poor as much as the rich. Clearly it will not, especially with, as we've argued repeatedly, the simply outrageous curtailment of the estate tax.

But it's not as if the rich hadn't been paying heavily: The top 1 percent of income earners now pay about one-fourth of all federal taxes; the top 5 percent about two-fifths.

That's because President Clinton raised the top income-tax rate from 31 percent to 39.6, while cutting taxes for working people through measures like the child credit and the earned-income-tax credit.

Clinton had stolen a march on the Republicans, slashing welfare as we've known it, so government programs were beginning to benefit not the poor so much as the middle class, who were also enjoying lower taxes.

And all of this was being financed by the super-rich, whose whining was muted because the fabulous '90s were making them money even faster than Uncle Sam could confiscate it.

Was this fair? Arguably, yes. But Republicans' greatest fear was that the broad middle classes would become dependent upon popular government programs — old-age pensions, cheap health care, more teachers and more police — that they hardly had to pay for. Then surely they would elect the representatives certain to sustain those programs, Democrats.

But Democrats today are essentially clueless. They don't have a popular leader; they don't have a cogent agenda. So they found themselves voting in large numbers last week in favor of a measure that is likely to ensure that they remain in the minority in Congress for the next decade and more — the tax cut.

Because by depriving government of $1.35 trillion in revenues over the next 11 years, Republicans have assured that there will be no large available funds to finance the sorts of programs — new or otherwise — that get Democrats elected. Eighty percent of the budget over those years is already spoken for by the military, debt service, Social Security and Medicare.

The Democrats are in deep trouble.

Look for the Republicans to set the tone, with welfare shrinking even more, Social Security (and next, perhaps, Medicare) being privatized (so it can no longer be a popular government program) and anti-consumer, anti-environment laws aplenty.

It's impressive that President Bush has accomplished this victory in less than four months in office, having arrived in the White House with no clear mandate. What's amazing is that the Democrats aided and abetted it.