Progress Report: Bush Tolerates Smear Campaign

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Center for American Progress - Progress Report

 

by David Sirota, Christy Harvey, Judd Legum and

Jonathan Baskin

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August 10, 2004

TAXES Letting the Cronies Off

ETHICS Bush Tolerates Smear Campaigne

UNDER THE RADAR

 

TAXES

Letting the Cronies Off

 

Just one day after attending a church service where

the topic was the excesses of wealth, President Bush

joked about taxes, saying " the really rich people

figure out how to dodge taxes anyway. " The statement

was a sharp departure from his past tough talk on tax

enforcement. Just four months ago, the president

claimed he wanted " to make sure that tax cheaters are

found, make sure the IRS gets after those who don't

pay taxes; make sure that the system is fair for those

of us who do pay taxes. We want everybody paying their

fair share. " Unfortunately, though, yesterday's quip

was far more indicative of the White House's record on

taxes than the tough talk from before. The Bush

administration has simultaneously reduced audits of

the biggest corporations (many of which finance its

political campaigns) while increasing scrutiny of

indivduals. More specifically, that increased scrutiny

has fallen on the working poor, even as high-income

and corporate tax cheating increases.

 

CUTTING CORPORATE AUDITS AFTER CORPORATE SCANDALS:

Even though major corporate scandals shook the

economy's foundation, the Bush administration has

reduced the number of audits Big Business faces. The

New York Times reported earlier this year, " an

independent analysis of new Internal Revenue Service

data shows that tax enforcement has fallen steadily

under President George W. Bush, with fewer audits,

fewer penalties, fewer prosecutions and virtually no

effort to prosecute corporate tax crimes. "

Specifically, the audit rate for the 11,200 largest

corporations, which pay nearly all corporate income

taxes, has fallen by almost half over the past decade,

as has the audit rate for unincorporated businesses.

The Washington Post reports in 2003, " only 0.73

percent of business tax returns were audited, down

from 0.88 percent in the previous year. "

 

RICHEST CORPORATIONS UNDER LESS SCRUTINY: The WP

reports, " among corporations with assets of at least

$250 million, audit rates slid to 28.98 percent last

year from 33.68 percent in 2002. In 1995, more than

half were audited. " #160; From 1999 to 2003, the number

of civil negligence penalties aimed at corporations

fell from 62 to 12. Civil fraud penalties dropped to

170 last year from 247 in 1999. And Bush's policies go

further than lax enforcement #8211; in some cases, it

means forcing the IRS to settle cases on terms

favorable to companies with shady behavior. The NYT

reports a recent agreement between the government and

a tech company " required the IRS to cooperate with the

company...in keeping its shareholders uninformed on

some basic terms of its stock-option plan, which an

audit said enriched the four top executives by as much

as $20 million in total. "

 

TAX PROSECUTIONS ARE DOWN: CFO Magazine reports that,

under the Bush administration, IRS prosecutions are

way down. Specifically, " tax prosecutions resulting

from IRS investigations are about half of what they

were 10 years ago. " Meanwhile, the number of civil

suits filed by the IRS dropped from 2,172 in 1993 to

just 575 in 2002.

 

BUSH SUBSTITUTES SHAM INDIVIDUAL AUDITS FOR REAL

CORPORATE AUDITS: The St. Petersburg Times reports,

" the Internal Revenue Service audited fewer

corporations, small businesses and partnerships last

year but more individual taxpayers. " Syracuse

University's Transactional Records Access

Clearinghouse reports that the audit rate for

businesses of all sizes slid slightly last year to 2.1

audits for every 1,000 businesses, from 2.2 audits per

1,000 businesses the previous year. At the same time,

the IRS audited 14 percent more individual tax

returns. But even that increase was suspect. The WP

reports that increase was " entirely attributable to

computer-generated letters automatically mailed when

discrepancies are found between tax returns and income

data. " In fact, the rate of face-to-face audits of

individual taxpayers has not changed in the past three

years, remaining at a paltry 1.6 audits for every

1,000 returns.

 

IRS CALLS FOR MORE ENFORCEMENT FUNDS REJECTED: At the

beginning of this year, the IRS indicated its desire

to do more audits to reduce tax cheating. But the

president's 2005 budget severely underfunds tax

enforcement. As the IRS Oversight Board reported, the

White House's proposal " not only threatens to end the

clear progress made in customer service, it also does

little to shrink our nation's tax compliance gap. It

does not back up its goals on enforcement with the

necessary resources to do the job. " As an American

Progress backgrounder notes, it was the fourth

straight year the Bush administration refused to

adequately fund tax enforcement. Not surprisingly, the

IRS last week reported that it does not have the funds

necessary " to collect some of the estimated $311

billion a year in unpaid taxes and to counter

taxpayers' growing acceptance of cheating. "

 

WHILE LETTING CORPORATIONS OFF, BUSH PUSHES AUDITS OF

POOR: At the same time the administration is relaxing

oversight of the major corporations which fund its

campaign, it is increasing audits specifically of the

working poor. As Gannett News Service reports, the

administration has unveiled a plan " to conduct

pre-certification audits for families claiming the

Earned Income Tax Credit (EITC) and the proposed

documentation for school lunches. " The EITC goes to

the working poor, meaning more families will have to

produce " pay stubs, rent receipts and school

transcripts " in order to qualify for the tax credit.

Additionally, " Bush also wants parents who do not

already receive food stamps or welfare benefits to

provide income verification before their child can

receive a free or reduced price school lunch. "

 

POLICIES MEAN MORE TAX BURDEN FALLING ON AVERAGE

AMERICANS: The NYT's David Cay Johnston notes " through

explicit policies, as well as tax laws never reported

in the news, Congress now literally takes money from

those making $30,000 to $500,000 per year and funnels

it in subtle ways to the super rich - the top 1/100th

of 1 percent of Americans. " He notes, " people making

$60,000 paid a larger share of their 2001 income in

federal income, Social Security and Medicare taxes

than a family making $25 million, the latest Internal

Revenue Service data show. " The Bush administration's

lax enforcement of corporate tax laws has been just

one of the factors in that shift. The NYT reports,

" new data show a continuing shift of tax burdens away

from businesses and onto individuals. Last year,

corporations paid 10.5 percent of all the taxes

collected by the Internal Revenue Service, down from

16.4 percent in 1973. "

 

ETHICS

Bush Tolerates Smear Campaign

 

A group of veterans have launched a media blitz

featuring a host of wholly unsubstantiated and largely

discredited charges against Sen. John Kerry (D-MA)

which call into question his record of honorable

military service in Vietnam. In particular, the group

#8211; called Swift Boat Veterans for Truth (SBVT)

#8211; is airing an ad featuring 13 men who never

served with Kerry calling him a liar and alleging that

he did not deserve the Silver Star, the Bronze Star,

and two of his three Purple Hearts. The allegations

contradict all of Kerry's crewmates who are still

living, medical records and an independent

investigation by historian Douglas Brinkley. Sen. John

McCain #8211; who was similarly smeared by false

charges during his 2000 campaign that he fathered an

out-of-wedlock black child #8211; called the group's

advertisement " dishonest and dishonorable. " But asked

specifically whether Bush would join McCain in

condemning the ad, White House Press Secretary Scott

McClellan demurred.

 

TELL BUSH TO HONOR HIS OWN WISHES FROM 1992: What a

difference a decade makes. According to the 7/14/92

Washington Post, George W. Bush wrote a letter in 1992

on behalf of his father's presidential campaign to

85,697 campaign contributors condemning an operation

attempting to smear Bill Clinton and encouraging them

not to contribute to the effort. E-mail George W. Bush

and tell him to follow his own example by condemning

the smear tactics of the SBVT and urging his

contributors not to finance their activities.

 

KEY MEMBER OF SBVT ADMITS HE WAS LYING: A key member

of SBVT, Kerry's former commanding officer George

Elliot, admitted to the Washington Post that his

affidavit suggesting Kerry did not deserve the silver

star was " a terrible mistake. " Elliot appears in the

SBVT advertisement and says, " John Kerry has not been

honest#160;about what happened in Vietnam. " SBVT

provided Elliot's repudiated affidavit as the support

of that statement. Elliot, who originally recommended

Kerry for the Silver Star, said that even at the time

he signed the affidavit he " knew it was wrong. " (After

Michael Kranish of the Boston Globe published the

story, he was falsely accused by Internet gossip

monger Matt Drudge of authoring the introduction to

John Kerry's campaign book.) Subsequently, Elliot has

signed a new affidavit, again alleging that Kerry

didn't deserve a Silver Star. But, according to the

non-partisan Annenberg Political Fact Check,

" Elliott's latest affidavit is misleading, containing

an incorrect characterization of the official basis

for Kerry's Silver Star. " Elliot does make clear that

he does not have any " personal knowledge " of the event

at issue and has " chosen to believe other men. "

 

FINANCIAL BACKER OF SBVT CLOSELY TIED TO BUSH: The

primary financial backer of SBVT is homebuilder Robert

Perry. Of the $158,000 the group had reported through

the end of June, Perry contributed $100,000. Perry

" has long-standing ties to many close associates of

President Bush and has contributed to Bush's last four

campaigns. " #160;Specifically, Perry has worked

closely with Bush's chief political advisor Karl Rove.

He donated more than $20,000 to Bush's gubernatorial

campaigns and, over the last four years, " has given

more money to campaigns and political

organizations...than any other Texan. " #160;

 

BOOK'S AUTHORS #8211; A BIGOT AND A 30-YEAR ANTI-KERRY

CRUSADER: As a sequel to their dishonest TV ads, SBVT

is planning the release of a new book on Aug. 15. The

book #8211; which has already soared to number one on

the Amazon bestseller list #8211; is #160;expected to

expand on the same discredited allegations featured in

the TV spot. It is co-authored by Jerome R. Corsi,

Ph.D. MediaMatters.org has complied a dossier of

Corsi's screeds which he has been posting on an

Internet bulletin board for the last three years.

Corsi on Islam: " a worthless, dangerous Satanic

religion. " Corsi on Hillary Clinton: " Anybody ask why

HELLary couldn't keep BJ Bill satisfied? Not lesbo or

anything is she? " Corsi on Muslims: " Ragheads are

Boy-Bumpers as clearly as they are Women-Haters #8211;

it all goes together. " The book's author, John O'Neill

#8211; member of the SBVT steering committee #8211; is

a longtime Republican operative. O'Neill was recruited

by President Richard Nixon in the 1970s to be a

counterfoil to Kerry when he was advocating for the

end of the Vietnam War.

 

 

 

 

 

MILITARY #8211; THE DEFERMENT OF THE HAWKS: In the

September 2004 Vanity Fair, which hit newsstand

shelves yesterday, respected journalist David

Halberstam examines the discrepancy between the

administration's hawks and their personal military

records. " To the new superhawks, an America engaged in

a worthy war of self-defense and a new imperial

America engaged in a war that is a significant

miscalculation of policy are the same thing. "

Halberstam adds, " Their new poster boy is the vice

president himself, a man of great certitude, not just

about Vietnam but about Iraq as well #8211; his

confidence and certitude hardly born of a life

experience. " Instead of going to war, " Richard Cheney

received five #8211; yes, five #8211; deferments, a

record that would make most men modest about speaking

out on Vietnam and related subjects. " And he's not

even the Bush administration's deferment king: That

(dis)honor goes to " that singular American patriot,

Attorney General John Ashcroft, who got seven. Yes,

seven. "

 

TERRORISM #8211; WHITE HOUSE LEAK ALLOWED AL-QAEDA

SUSPECTS TO ESCAPE: The AP reports, " the disclosure to

reporters of the arrest of an al-Qaeda computer expert

allowed several wanted suspects from Osama bin Laden's

terror network to escape. " On Sunday " National

Security Adviser Condoleezza Rice acknowledged...that

Khan's name had been disclosed to reporters in

Washington 'on background,' meaning that it could be

published. " According to senior Pakistani officials

" after Khan's arrest, other al-Qaeda suspects abruptly

changed their hide-outs and moved to unknown places. "

Sen. Chuck Schumer has asked the White House " to

explain why the name of Khan was revealed.

 

ECONOMY #8211; THE RICH GET RICHER: The Washington

Post reports, " The centerpiece provision of the

sweeping corporate tax cuts steaming through Congress

would help only about 1.1 percent of the nation's 2.2

million corporations, leaving some of the most

troubled domestic manufacturers with no benefit at

all, according to an analysis by the nonpartisan staff

of Congress's Joint Committee on Taxation. " #160;The

bill, which gives top corporations $63.3 billion in

tax cuts, is going to top companies in no need of

government help: #160; " The 500 companies that would

reap the majority of the benefit have projected

estimated manufacturing income of more than $4.5

trillion in 2005 alone, an average of $9 billion in

profit each. " The findings " confirm my worst fears, "

Sen. John D. Rockefeller IV (D-W. Va.) said in a

letter sent to colleagues last night. " More than 95

percent of manufacturing corporations -- the presumed

targeted beneficiaries of the provision -- receive

either no benefit or less than $50,000 of benefit. "

 

IRAQ #8211; CHALABI BITES THE HAND THAT FED HIM: Faced

with a warrant for his arrest, former pet of the Bush

administration Ahmad Chalabi went on the attack

yesterday, blaming a U. S. conspiracy for

orchestrating the charges. (He also has stated that

the biggest U.S. error in Iraq was the occupation.)

The accusation, though unproven, is a stumbling block

for the " interim Iraqi government, which has been

working to shrug off accusations that the Americans

retain extensive influence. " Chalabi is being charged

with counterfeiting and money laundering; his nephew

Salem, whom he put in charge of the Saddam tribunal,

is also wanted as part of a murder investigation. As

Robert Scheer writes in the LA Times: " For those

keeping score at home, that's two indicted Chalabis,

one huge black eye for the Bush administration and a

healthy dose of vindication for the CIA and the State

Department, both of which decided long ago that Ahmad

Chalabi wasn't trustworthy. "

 

TERRORISM #8211; AL QAEDA, THE HYDRA: President Bush

frequently touts the claim that much of Al Qaeda's

leadership has been killed or captured as proof the

United States is making strides in the fight against

terrorism. True, many of the leadership have been

captured, but the arrests are not alleviating the

danger. New evidence suggests that the organization is

" regenerating and bringing in new blood. " Intelligence

analysts have found instead of being weakened, " Al

Qaeda's upper ranks are being filled by lower-ranking

members and more recent recruits. "

 

#160;Don't Miss

DAILY TALKING POINTS: President Accepts 'Really Rich

People' Cheating On Taxes

 

ECONOMY: The Fed Loosens Its Lips

 

ECONOMY: Corporate chairman writes in the Financial

Times that the Bush economy is for the " elite few. "

 

MEDIA: CMPA media director Matthew Felling examines

how terrorists manipulate images to use media as

weapon.

 

SCIENCE: Sen. John Edwards calls for an end to the ban

on stem-cell research.

 

ECONOMY: Turning the Corner Into a Dead End

 

IVO DAALDER: Time to Intervene in Sudan

 

Contact The Progress Report.

 

 

 

 

#160;Daily Grill

 

#160; " [i want] to make sure that tax cheaters are

found, make sure the IRS gets after those who don't

pay taxes; make sure that the system is fair for those

of us who do pay taxes. We want everybody paying their

fair share. "

 

- George W. Bush, 4/15/04

 

VERSUS

 

" The really rich people figure out how to dodge taxes

anyway. "

 

- George W. Bush, 8/9/04

 

#160;Daily Outrage

The White House refuses to take John McCain's advice

and condemn discredited advertisements attacking John

Kerry's war record.

 

#160;Archives

Progress Report

 

#160;Opportunity

The Center for American Progress is now accepting

intern applications for the fall semester.