Fiscal Quagmire

Say this for the Bush administration: it will stick with a failed policy, come what may.

Facts matter: Sign up for the free Mother Jones Daily newsletter. Support our nonprofit reporting. Subscribe to our print magazine.


Article created by The Century Foundation.

The Bush administration has been better at starting policy initiatives and sticking to them than at finishing the job successfully. The war in Iraq is only the most salient of the failed policies that the administration is steadfastly pursuing.

On the economic front, the administration has launched one tax bill after another, all aimed at reducing taxes, especially on income from capital.

Unlike the war in Iraq, where every day brings news to families of the devastating human cost, the war on taxes is only preparing the ground for a harvest of economic problems. It may be years before the chronic build-up of national debt leads to flight from the dollar, high interest rates, and accelerating inflation, but that is where our fiscal policy is taking us.

Congress is now negotiating to approve tax cuts that will cost about $70 billion between 2006 and 2010. Some of these cuts, notably reform of the out-of-control Alternative Minimum Tax, are necessary. But other tax cuts that are likely to come out of the reconciliation process now underway in Congress are disastrously misguided. In particular, the plan to extend the huge tax breaks on income from dividends and capital gains only makes sense if the goal is for the federal government to borrow money in order to reward the very rich.

The Joint Congressional Committee on Taxation estimates that extending these tax breaks on income from capital would cost $51 billion over ten years. The Urban Institute-Brookings Tax Policy Center estimates that more than $45 billion of this tax break would go to households with income over $100,000 per year, and $27 billion of it would go to the 0.2 percent of households with income over $1 million.

But the real disaster of the administration’s relentless war on taxes is that the numbers just do not add up. If a bad tax—like the Alternative Minimum Tax—is cut, good policy requires that some other revenue source take its place (unless spending is cut). But the administration is proposing nothing but tax cuts, while it piles new spending on top of new spending. To the cost of the war on terror add the cost of wars in Iraq and Afghanistan and add the cost of hurricane relief and add the cost of the Medicare prescription drug law…all paid for by running up debt.

We cannot spend more and more money, cut more and more taxes, and carry on without looking where we are headed. The administration needs to tell us its fiscal exit strategy.

We've never been very good at being conservative.

And usually, that serves us well in doing the ambitious, hard-hitting journalism that you turn to Mother Jones for. But it also means we can't afford to come up short when it comes to scratching together the funds it takes to keep our team firing on all cylinders, and the truth is, we finished our budgeting cycle on June 30 about $100,000 short of our online goal.

This is no time to come up short. It's time to fight like hell, as our namesake would tell us to do, for a democracy where minority rule cannot impose an extreme agenda, where facts matter, and where accountability has a chance at the polls and in the press. If you value our reporting and you can right now, please help us dig out of the $100,000 hole we're starting our new budgeting cycle in with an always-needed and always-appreciated donation today.

payment methods

We've never been very good at being conservative.

And usually, that serves us well in doing the ambitious, hard-hitting journalism that you turn to Mother Jones for. But it also means we can't afford to come up short when it comes to scratching together the funds it takes to keep our team firing on all cylinders, and the truth is, we finished our budgeting cycle on June 30 about $100,000 short of our online goal.

This is no time to come up short. It's time to fight like hell, as our namesake would tell us to do, for a democracy where minority rule cannot impose an extreme agenda, where facts matter, and where accountability has a chance at the polls and in the press. If you value our reporting and you can right now, please help us dig out of the $100,000 hole we're starting our new budgeting cycle in with an always-needed and always-appreciated donation today.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate