Thanks Ever So Much, President Poor-Mouth

And the logic of the Bush economic plan has taken an Orwellian turn. Let's see now: we can afford to lock in a huge tax cut over 10 years because the economy is strong and producing huge surpluses. But we need a huge tax cut because the economy is weak and cannot be depended on to produce those surpluses. Which is it?

Meanwhile, most of the Bush cuts don't take effect until 2006, long after they can have any impact on current conditions. Even with the retroactive provision, a paltry $6 billion would go back to the tax- payers this year, not enough to kick-start a motorbike in an economy as big as ours. The GOP majority in the House apparently decided to overlook that slight detail when it passed the tax plan this month intact, but the Senate is already balking.

As for who gets the loot: at first, administration officials tried to deny that more than 40 percent would eventually go to the top 1 percent of taxpayers (including an average of $4 million each for the 400 richest Americans). When that didn't fly, Bush unveiled a new argument, insisting that the tax cut for the wealthy was the only way to encourage the entrepreneurship necessary for recovery. He neglected to mention that the vast majority of small-business owners incorporate (for liability and tax reasons) and thus their businesses wouldn't be affected by personal-income-tax cuts. Then there's the inconvenient fact that the greatest period of entrepreneurship in American history--the 1990s--came just after a sharp increase in income taxes at the top end. So much for supply-side economics.

Speaking of which: the tactical model for the Bush Bears is 1981, when newly installed Reagan aides declared an "economic Dunkirk" (for those who need a refresher on their World War II history, that means an emergency) to build support for their budget and tax cuts. But 20 years ago unemployment and inflation were near double digits and interest rates approached a ghastly 20 percent. Poor-mouthing the economy was simple honesty then. With things so much better now (today's unemployment, inflation and interest rates are in the 5 percent range or below), pessimistic prophecies actually carry the risk of self-fulfillment.

Obviously some kind of tax cut would help stimulate the economy now. Lots of alternatives are floating around, but most are too complex for fast action. The exception may be a $700 billion cut sponsored by Sens. Bob Graham and Jon Corzine that cuts the bottom rate from 15 percent to 10 percent on the first $19,000 in income, rebating nearly $1,000 to every American family as early as this summer. This is a Kmart cut that could actually give the economy a little jolt. "It's simple, speedy and substantial," says Corzine, who knows a thing or two about the economy from his years on Wall Street. It's also sensible, which in today's climate means it probably won't pass.

© 2001