(NNPA) — President Obama should set the tone for his next two years by insisting that the Bush tax cuts remain in place temporarily for 98 percent of Americans, but not the top 2 percent who already enjoy a disproportionate share of the benefits. All signs are pointing to the president caving in to obstinate Republicans in Congress who want to extend the cuts, set to expire at the end of the year, for everyone including the top 2 percent.
President Obama campaigned on a pledge to end the Bush tax cuts for the top 2 percent of taxpayers, defined as an individual earning at least $200,000 a year and couples earning a minimum of $250,000. But it appears he is on the brink of breaking that promise. If neither President Obama nor Republicans are willing to take such a modest step of extending the tax breaks only to those who need them the most, they are not serious about wanting to reduce the deficit.
President Obama repeatedly reminds us that he inherited a mess from George W. Bush. And he is correct. “If not for the tax cuts enacted during the presidency of George W. Bush that Congress did not pay for, the cost of the wars in Iraq and Afghanistan that were initiated during that period, and the effects of the worst economic slump since the Great Depression (including the cost of steps necessary to combat it), we would not be facing these huge deficits in the near term,” observed the Center on Budget and Policy Priorities, a nonpartisan think tank in Washington, D.C.
In case no one has noticed, Bush has not lived in the White House for the past two years. And the person who does live there moved in after volunteering to clean up after the Bush circus left town. This should begin with President Obama stating that unlike Republicans, he will not serve as a mouthpiece for big business and people with big bucks.
“In 2010, when all of the Bush tax cuts are finally phased in, a staggering 52.5 percent of the benefits will go to the richest 5 percent of taxpayers,” noted Citizens for Tax Justice.
According to the Treasury Department, extending the Bush tax cuts to the top 2 percent of taxpayers would cost $678 billion over the next decade.
“In the long term, many economists believe that investments in education, infrastructure, alternative energy and other public goods are far more beneficial to our economic growth than the parts of the Bush tax cuts for the wealthy,” Citizens for Tax Justice stated. “This should not be surprising. Federal taxes were higher for most Americans at the end of the Clinton years, and the economy was performing far better than it is now. At very least, one can conclude that the Bush tax cuts did not result in the economic prosperity that their supporters promised would result.”
The federal deficit for fiscal 2009 was $1.4 trillion. It represents nearly 10 percent of the Gross Domestic Product (GDP), the largest proportion of the economy since World War II. If nothing is done to curb the deficit, it is expected to remain near $1 trillion a year for the next 10 years. Mounting deficits requires borrowing more money from abroad and continuing to pay interests on those and other loans, leaving less money available to invest in future programs. Some call it mortgaging the future.
Alan Greenspan, the former Federal Reserve chairman, and David Stockman, who was President Reagan’s budget director, advocate letting all of the Bush tax cuts expire on December 31. According to the Organization for Economic Cooperation and Development (OECD), the total federal, state and local taxes in the U.S. are among the lowest in the industrialized world, with only Turkey and Mexico lower.
The Republican solution to attacking the deficit, if it can be called that, is to cut non-security discretionary programs. A plan outlined by incoming House Speaker John Boehner would reduce such spending by $101 billion or 21 percent. Exempt from the cuts would be spending for defense, homeland security, military and veterans appropriations. There is no way to come close to making a serious dent in the deficit without touching many programs considered untouchable. According to the Congressional Budget Office, Social Security is projected to account for 21 percent of the federal budget, Defense 16 percent, Medicare 14 percent, Medicaid 10 percent, net interest 14 percent and other spending 22 percent.
Slashing budgets could have a devastating impact on many programs, including education. A 21 percent decrease in K-12 education funding, for example, would mean a loss of more than $8.7 billion. The Center on Budget and Policy Priorities said such a cut could mean reducing housing programs by $6.9 billion, children and family services by nearly $2.2 billion and the nutritional program for at-risk pregnant women, infants and children (WIC) by $1.6 billion.
Federal aid to cities and states would compound deep cuts already made at that level. According to the Center on Budget and Policy Priorities, 46 states have balanced their budgets during this fiscal crisis by cutting funds to education, health and other programs for the needy.
Another GOP priority is to scuttle health care legislation. Estimates from the Citizens for Tax Justice demonstrate that the Bush tax cuts cost almost $2.5 trillion over the decade they were enacted (2001-2010). The Congressional Budget Office says health care reform will cost approximately $1 trillion over the next decade which means the Bush tax cuts cost two and a half times as much as health care.
“Many of the lawmakers who argue that the health care reform legislation is ‘too costly’ are the same lawmakers who supported the Bush tax cuts,” Citizens for Tax Justice observed. And now they favor extending those tax cuts to the wealthiest 2 percent of the population.
President Obama should just say no to the Party of No.
George E. Curry, former editor-in-chief of “Emerge” magazine and the NNPA News Service, is a keynote speaker, moderator, and media coach. He can be reached through his website, www.georgecurry.com. You can also follow him at www.twitter.com/currygeorge