May 27, 2010
President George W. Bush entered office on January 20, 2001. Within a week, work began on crafting a bill to cut taxes. On May 15, 2001 the largest tax cut bill ever was introduced in the House. It passed the House one day later. On May 23, 2001 it passed the Senate. Bush signed it into law on June 7, 2001, just four and one-half months after taking office. The quick success was due to Republicans controlling both the House and the Senate, undermining any objections from Democrats. These tax cuts and others are “sunset provision” tax laws that the current Congress is debating.
Bush also signed into law other tax cuts in 2002, 2003, 2004 and 2005. These tax cuts were in the face of two wars started under the Bush administration, with the Iraqi War a war of choice. Bush made no attempt to pay for these wars, just charging it to the taxpayers. He even “hid” the war cost by not putting it in his budgets, thereby making his budgets appear less expensive. Instead, he would ask for and was easily granted more money by the Republican-controlled Congress. Now the American taxpayers have to pay for both the wars and Bush’s tax cuts.
The share of income dramatically changed with the Bush tax cuts as per the Congressional Budget Office. The share of the bottom four quintiles went from 53 percent down to 49.5 percent while the share for the highest quintiles rose from 48 percent to nearly 52 percent in just 4 years. The spread has certainly widened considerably in the past 5 years.
The Pew Trust has published a study of the cost of extending the Bush tax cuts. Bush’s tax cuts have already added $1.8 trillion to the national debt. If the tax cuts are extended it will add another $3.1 trillion to the debt over the next 10 years when interest on the borrowed money is added. That equates to a 25 percent increase of debt without any additional spending.
The Pew study gives the figures for two variations of the tax cuts. That is to say, Congress is looking at allowing some of the Bush tax cuts expire but keep others in place. While the cost will obviously decrease, the 10-year cost is still huge at $2.3 trillion. For various reasons, another option being studied is to extend the tax cuts for two years, which would cost $558 billion over ten years.
The CBO has also taken a detail look at what has happened as a result of the Bush tax cuts and what could happen if they are allowed to expire. Naturally, this study was in 2008 before the collapse of Wall Street that will eventually cost trillions of dollars. But the chart reflects the relative results if the tax cuts are allowed to expire.
Should Congress extend any of the tax cuts, even for two years, it will be nothing more than a copout for Congress. First, they could avoid making the tough decisions, which they are experts at. Second, its election year for the vast majority and “adding taxes” is never a good thing politically during election year. Therefore, I fully expect that to happen. But the taxpayer (or at least our children) will be the loser if any of the tax cuts are left in place.
The time has come!!! We’ve danced to the piper!! It’s now time to pay the piper! And paying the bills substantially ran up by corporate America and the wealthy through greed (Wall Street) and tax relief can not be paid in full by the ordinary taxpayer. Everyone has to make sacrifices. So it’s not only time to let all the tax cuts expire, but to close all the tax loopholes enjoyed by corporate America and the wealthy. Then those tax laws that were enacted to “legally” allow corporations and wealthy folks avoid paying taxes most certainly has to be repealed. If there is any single ordinary tax payer out there who disagrees with this, then you are agreeing to pay taxes dully owed by corporate America and those made wealthy by that.