Progress Report: Bush's Middle Class Tax Hike

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Tue, 08 Feb 2005 08:27:38 -0800

Progress Report: Bush's Middle Class Tax Hike

 

" American Progress Action Fund "

<progress

 

 

The Progress Report

 

by Christy Harvey, Judd Legum and Jonathan Baskin

with Nico Pitney and Mipe Okunseinde

..February 8, 2005

 

BUDGET Bush's Middle Class Tax Hike

SOCIAL SECURITY Hot Air in Motown

UNDER THE RADAR Go Beyond The Headlines

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BUDGET

 

Bush's Middle Class Tax Hike

 

A closer look at the administration's 2006 budget shows an economic

agenda promoting the wrong choices and wrong priorities. Rolling back

massive tax cuts for millionaires is off the table, but the Bush

administration has no qualms about raising taxes on average Americans.

The budget President Bush submitted to Congress yesterday imposes $5.3

billion in new, regressive taxes. (They are conveniently listed in

table 18-3 on page 305 of the Analytic Perspectives supplement to the

budget.) The administration's budget contains new taxes that will

increase the price of a six pack of beer, an airline ticket and

prescription drugs for veterans. Meanwhile, the budget cuts funding

for education, public health and environmental protection and includes

$1.4 trillion in new tax cuts for the wealthy. Welcome to Bushonomics.

(Sound off on the president's middle-class tax hike on ThinkProgress.org.)

 

THE SHELL GAME: No matter which way you slice it, the administration's

budget is egregiously fiscally irresponsible – by its own estimates,

it will result in a $390 billion deficit in 2006. Worse, that figure

is only arrived at through trickery. The budget includes over a

billion dollars in revenue from drilling in the Arctic National

Wildlife Refuge (ANWR), even though Congress hasn't authorized such

drilling and has rejected President Bush's proposal to open ANWR to

oil exploration for the last four years. Budget Director Josh Bolten

defended the move, claiming, " the budget is the right place to present

the entirety of the president's policies, so all of his proposals are

reflected in there. " Really? The Bush budget excludes all funding for

operations in Iraq and Afghanistan and the administration's $2

trillion Social Security package.

 

KICKING THE NEEDIEST WHILE THEY'RE DOWN: During the Bush

administration, more and more Americans are struggling. The Center for

Budget and Policy Priorities sums it up: " The number of poor went up

for the third straight year in 2003, the share of total income that

goes to the bottom two-fifths of households has fallen to one of its

lowest levels since the end of World War II, and the number of people

lacking health insurance rose to 45 million in 2003, the highest level

on record. " Yet the Bush administration is cutting programs that help

people get back on their feet. For example, the administration's

budget proposes " a five-year freeze on child care funding that...will

result in cutting the number of low-income children receiving child

care assistance by 300,000 in 2009. " The Bush budget also cuts $45

billion from Medicaid, the program that provides basic health coverage

to the poor.

 

THE MEDICARE MESS: The industry-backed prescription drug bill

President Bush jammed through Congress is a bad law that keeps getting

worse. While the bill was pending before Congress, the administration

promised the bill would cost $400 billion over 10 years and threatened

to fire the Medicare actuary who knew that figure was too low. Later,

the administration revised its estimated price tag to $534 billion

over 10 years, largely due to excessive payments to private insurers

and HMOs. Now, in the most recent budget, the Bush administration

estimates the bill will cost $395 billion over five years. In the

meantime, drug companies have already jacked up their prices enough to

offset any discount to seniors.

 

FUNDING FOR ABSTINENCE-ONLY PROGRAMS INCREASED: Apparently, President

Bush isn't concerned that abstinence-only programs are misleading the

nation's children about sex. A study last year found that some of the

most popular programs pushed lies, such as claiming that mutual

masturbation can cause pregnancy and condoms fail to prevent the

transmission of HIV 31 percent of the time. President Bush's budget

increases funding for abstinence-only education by $39 million, to a

total of $209 million.

 

FUNDING FOR CLEAN WATER SLASHED: Good news for Evian, bad news for

everyone else. President Bush proposes reducing federal funds states

use to improve water quality by $369 million. The federal contribution

to the program is now just $730 million, down from $1.98 billion four

years ago.

 

SOCIAL SECURITY

Hot Air in Motown

 

President Bush heads to Detroit, MI, today as part of his aggressive

marketing campaign to sell his deeply flawed – and very expensive –

Social Security plan. Don't hold your breath waiting for the president

to flesh out more details, however; the Detroit Free Press reports

" the traditional question and answer period after the speech has been

dropped for Bush's visit. " (There may be good reason for this: as the

New York Times wrote this weekend, when it comes to the Bush plan,

" The more we learn, the worse it gets. " ) Don't believe his hype. Here

are the basics to keep in mind when listening to his sales pitch.

 

IT'S A BENEFIT CUT: The private accounts President Bush wants to

create do nothing by themselves to reduce the shortfall. A White House

memo to conservative allies which was leaked to the press last month

even " acknowledged that individual accounts themselves would do

nothing to close the projected Social Security shortfall. " What

President Bush really is pushing are giant benefit cuts, which he said

during his State of the Union Address were " on the table. "

 

IT'S A TAX HIKE: President Bush has resisted raising the payroll tax

to pay for Social Security reform. But don't be fooled: his Social

Security plan is a tax hike. Here's how it works: President Bush is

proposing keeping the Social Security wage tax at the same level while

reducing benefits for future retirees. " By keeping the tax the same

and reducing future benefits, " Newsweek reports, " Bush is like a

candymaker that cuts 46 percent off a chocolate bar but charges the

same 75 cents for it. In other words, his plan would effectively

increase the Social Security tax. "

 

IT INCREASES THE DEBT: The Bush plan also entails " significant new

federal borrowing. " Vice President Cheney this weekend admitted the

government would have to borrow $754 billion over the next decade to

set up the private accounts. (That's low-balling the number – most

experts agree the first ten years of the Bush tax plan would cost

about $2 trillion.) And after that? " Trillions more after that,'' he

admitted. Large-scale borrowing carries a huge price for the middle

class. When the federal government runs up a large debt, that means

less money is available for average Americans to borrow when they want

to buy a house or a car or pay for college tuition. That smaller pool

of money available for loans translates into higher interest rates –

which not only puts a squeeze on individual consumers but also slows

the rate of economic growth. That means, in the long run, fewer jobs,

low wage growth and less money coming into the federal Treasury.

 

THE MONEY'S NOT REALLY YOURS: President Bush is trying to capitalize

on the fact that Americans like to own things to sell his program to

chop Social Security benefits. The reality of his plan is a far cry

from the private ownership he's touting, however. For example, instead

of private plans that let Americans control their own investments,

there are tight restrictions on which conservative stocks and bonds

the public will be allowed to buy. And, the New York Times writes,

" the more restrictions there are, the harder it would be for people to

achieve the outsized returns the administration has generally promoted

to sell the public on private accounts. " Also, Bush has played up the

fact that his accounts can be passed on to one's heirs. In reality,

unless you die before you retire, there's not going to be a lot to

bequeath. Retirees under the Bush plan will be required to use the

money in their accounts to buy the annuities that will then provide

them with their post-retirement income. The only money left to pass to

heirs is whatever is left over – if anything – from purchasing the

annuities. As Business Week puts it, " The problem isn't the

restrictions on ownership in the Bush plan. It's the false billing,

which is aimed at drumming up support from a skeptical public. "

 

PRESIDENT BUSH EXPLAINS IT ALL: Confused about how President Bush's

Social Security privatization proposal works? Here is his explanation:

" Because the – all which is on the table begins to address the big

cost drivers. For example, how benefits are calculate, for example, is

on the table; whether or not benefits rise based upon wage increases

or price increases. There's a series of parts of the formula that are

being considered. And when you couple that, those different cost

drivers, affecting those – changing those with personal accounts, the

idea is to get what has been promised more likely to be – or closer

delivered to what has been promised. Does that make any sense to you?

It's kind of muddled. " (Thanks to Atrios.)

 

 

Under the Radar

 

STATE WATCH – ILLINOIS FIGHTS BACK AGAINST BIG PHARMA: The attorney

general of the state of Illinois has filed a lawsuit accusing nearly

50 major drug makers " of defrauding the state by overcharging

government programs and Illinois Medicare customers out of hundreds of

millions of dollars. " The suit, which purports that the pharmaceutical

firms have been scheming and bilking both " the Medicaid program and

Medicare participants " for nearly a decade, is similar to complaints

that various state prosecutors have filed " in at least 19 other states

over the last two years. " Though the drug makers continue to deny any

wrongdoing, a Congressional investigation revealed that " the pricing

system used by drug makers has resulted in overpayments by government

insurers of at least $800 million annually, while patients…spend an

extra $200 million a year. "

 

WOMEN – SPOUSAL RAPE LAWS CHALLENGED: The AP reports the case of a

49-year-old Arizona woman who " was awakened around midnight by an

assailant who choked her, dragged her by the hair and raped her so

many times before the sun came up that she lost count, police say. "

Typically such a heinous crime would be punishable by 14 years in

state prison. Yet the alleged attacker in this case was the victim's

husband, and under Arizona spousal rape laws his punishment if

convicted will be " no more than 1 1/2 years behind bars, and perhaps

no prison time at all. " Prosecutors in the case " say the disparity is

unconstitutional, " and so have " charged him under the standard rape

law, setting the stage for a legal battle over whether Arizona's

spousal rape statute violates the Constitution's equal protection

guarantees. " According to the American Prosecutors Research Institute,

about half of the states treat spousal rape differently from other

types of rape.

 

IMMIGRATION – ASYLUM SEEKERS MISTREATED: The plaque at the base of the

Statue of Liberty might be in need of a new inscription: " Give me your

tired, your poor…but keep your expectations low and be sure to bring a

lawyer. " According to a report recently released by the bipartisan

United States Commission on International Religious Freedom, the

Department of Homeland Security is currently running an " ad hoc

system " when it comes to the processing of asylum seekers. The

slipshod work has led to " extreme disparities in who is released or

granted asylum, depending on whether someone seeks refuge in Texas or

New York, comes from Iraq or Haiti, or is represented by a lawyer. "

For these reasons, " thousands of people who come to the United States

saying they are seeking refuge from persecution are treated like

criminals while their claims are evaluated. "

 

MILITARY – MORE SPECIAL FORCES? JUST 'A PIPE DREAM': Prominent figures

in military and political circles alike have stressed how important

the Army's Green Berets are to the pursuit of al Qaeda terrorists and

the war on terror overall; their training is " a perfect fit for the

war on terror because they train for [its] unconventional warfare. "

So, how much did the president's new budget allot to these Special

Force units that are currently " operating at under their authorized

strength " ? The Washington Times reports that " there has been no budget

authorization for significantly more Green Berets because Army Special

Operations cannot fill all the billets it had before the September 11

attacks. " Furthermore, the recruits who are able to make it through

the intense qualification school are often lured by the private

sector, which pays nearly double the salary of the military, and

ironically end up employed by the same for-profit contractors for

which the administration funnels vast amounts of money to contract out.

 

VALUES – GOP PASSION FOR PORN: Lost in the media's myopic focus on

" conservative moral values " is the explicit connection between porn

providers and right-wing politicians. As ABC News reports, the

nation's major cable companies reap millions from selling hardcore

pay-per-view porn in homes across the country, then turn around and

fill the coffers of right-wing politicians who trumpet " moral values. "

President Bush and the Republican Party received nearly $1 million

from Comcast Cable, for instance, while Adelphia Communications " has

given $166,000 to Republican committees, $17,000 to conservative Rep.

John Peterson, R-Pa., and $12,000 to Sen. Rick Santorum, R-Pa., one of

the most conservative members of the Senate. " Conservative activists

say " the rush of major America companies to profit from porn…is

hypocrisy fueled by billions in corporate profits. "

 

 

DAILY GRILL

 

" My budget will commit an additional 400 billion dollars over the next

decade to reform and strengthen Medicare. " – President Bush, on the

cost of his Medicare drug law, 1/28/03

 

VERSUS

 

" The Medicare prescription drug benefit Bush pushed through in his

first term will take effect in 2006 and cost $395 billion over five

years, a steep increase. " – Washington Post, reporting President

Bush's administration's new estimate for spending same amount in half

the time, 2/7/05

 

 

DAILY OUTRAGE

 

The AP reports a Columbia, MD, corporation, W.R. Grace and Co., " knew

a Montana mine was releasing cancer-causing asbestos into the air and

tried to hide the danger to workers and townspeople. " According to

federal prosecutors, " more than 1,200 people became ill, and some of

them died. " Think it's probably time for President Bush to rethink his

State of the Union comments about " frivolous asbestos claims. "