Come flood or fire, tax cuts for rich flow on

Author: Tom Moran

Published: September 9, 2005

Before Hurricane Katrina struck her blow, Republicans in Congress were preparing to enact another round of tax cuts aimed at the wealthiest Americans, along with deeper spending cuts aimed at the poorest.

You might hope that Katrina would shake them from this routine. We have more urgent priorities now. And we've seen with our own eyes that the gap between rich and poor in this country remains profound.

But none of this seems to have penetrated. Treasury Secretary John Snow told members of Congress this week that it was more important than ever to cut taxes, a view that's echoed by several Republicans in New Jersey's delegation.

"The economy has taken a real hit," says Rep. Mike Ferguson (R-7th Dist.). "We shouldn't give it another hit by raising taxes, or allowing tax cuts to expire."

Katrina may change a great deal in this country. New Orleans is crippled, perhaps forever. Americans' faith in their government, shaken by the incompetence in Iraq, is now shattered.

The failure to provide for the poor in New Orleans, and the unfathomable delay in rescuing them, has left many Americans infuriated, even ashamed. No one knows what might change when that anger finds a political home.

But one thing has not changed: The bedrock belief of Republicans that tax cuts are the cure for all that ails us.

The budget resolutions passed by Congress call for tax cuts of $70 billion over the next five years, along with $35 billion in cuts to entitlement programs like Medicaid, food stamps and college loan programs.

The tax cuts would go overwhelming to the very rich.

The most likely move is an extension of tax cuts on stock dividends and capital gains that were scheduled to expire in 2008. More than half the money would go to the wealthiest 0.2 percent of the population, those with annual incomes over $1 million, according to a joint study of the Brookings Institution and the Urban Institute.

To do this while rescue workers are plucking bodies from the water in New Orleans would be unseemly. So expect a delay of several weeks.

"My sense is that for the time being all eyes need to be on the Gulf, and of course the war in Iraq," says Rep. Chris Smith (R-4th Dist.).

But Katrina did nothing to lessen his enthusiasm for tax cuts later this year. "I think we've done an exemplary job of lowering taxes and stimulating the economy," he says.

All this leaves Democrats pulling out their hair.

Sen. Jon Corzine, the Democratic candidate for governor, says the Republican mantra that cutting taxes will force spending cuts is coming back to haunt the country.

"Last year we went from $105 million to $40 million in spending to protect the soup bowl of New Orleans," Corzine says. "You can do that kind of thing to fund high-end tax cuts, but you're going to end up paying the piper at some point."

Rep. Rob Andrews (D-1st Dist.) simply cannot fathom the GOP logic.

"How can anyone in their right mind pursue this strategy after Katrina?" he asks. "We need more resources to respond to this crisis, not less. We need more Medicaid to respond to this crisis, not less."

But Andrews is in the minority, and in the House, that means he can only fire spitballs from the cheap seats.

The decision is in the hands of Republicans, who say that failing to extend all the earlier Bush tax cuts is, in effect, a tax increase. And they're not about to let that happen on their watch.

"No one has ever shown to me how raising taxes is ever good for the economy," says Rep. Scott Garrett (R-5th Dist.). "And at this point, we need to do everything we can to keep the economy moving."