Tax Fraud

President George W. Bush wants Congress to pass a budget for fiscal year 2004 whose centerpiece is a $726-billion tax cut (over ten years). The president plans to eliminate the tax on most stock dividends and accelerate already scheduled tax reductions for those in the higher brackets. Bush has called his proposal "bold," and that is certainly one word for it. Others call it irresponsible, or even "fiscal insanity."

Bush, lest we forget, entered the White House with budgetary surpluses. Now, hundreds of billions of dollars in deficits stretch out as far as the eye can see, threatening (perhaps by design) to undermine both Medicare and Social Security. Yet the president refuses even to consider a return to balanced budgets. Bush’s argument is familiar "supply side" economics: tax cuts produce investment and economic growth that in turn increase tax revenue. Once the economy turns around, thanks to the stimulus provided by lower taxes, the budget will balance itself.

Of course, that is not how Republican tax cutting has worked in the past. Under Ronald Reagan, significant tax cuts and large military budgets produced unprecedented deficits while at the same time dramatically reducing the amount of tax money available for domestic programs. With a budget deficit projected at $400 billion this year and the costs of war in Iraq ($75 billion for the first six months) only beginning to be felt,...

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