Tax shenanigans/Last-minute bill deserves to fail

Published: July 22, 2004

In three waves since 2001, President Bush has pushed more than $1 trillion of tax cuts through Congress, even while the federal budget was swinging from record surpluses to record deficits. Now, in a last-minute maneuver before lawmakers recess for the summer, the White House is trying to rush another $80 billion of tax relief through the House and Senate. This is budgeting at its most reckless and politics at its most cynical. Members of the Minnesota delegation should say no.

Architects of the plan, which could get floor votes today or tomorrow, say they are merely extending tax provisions that otherwise would expire in December. That's true. But the very same leaders calling for extended tax relief today are the ones who promoted temporary tax relief in 2003. They adopted "sunsets" then to reduce the apparent size of their tax bill, so they could cram more tax cuts into one package, and knowing that Congress would face irresistible political pressure to extend the provisions once they became law.

Well, they gambled wrong: The federal deficit will reach something like $500 billion this year, and Congress simply can't afford to renew the expiring provisions unless it finds the money to pay for them.

The plan's proponents also say they have focused on provisions benefiting the middle class: the so-called marriage penalty; a tax credit for children; and the new bottom 10 percent tax bracket. It's true that their package excludes the high-end provisions, such as estate tax relief and a reduction in taxes on dividends. But that doesn't mean that it mainly benefits the middle class. A family in the top fifth of the income distribution would get a tax cut three times bigger than a family in the middle fifth from this plan, according to the Urban Institute and the Brookings Institution, two centrist and nonpartisan Washington think tanks. By rushing this package to the House and Senate floor without committee hearings, proponents must hope to gloss over these nettlesome details.

A more responsible plan would at least offset the tax-cut extensions with other revenues. In the Senate a bipartisan group that includes John McCain of Arizona, Olympia Snowe of Maine and Max Baucus of Montana has proposed paying for the extensions by closing corporate loopholes and raising customs fees. If lawmakers are really intent on protecting the pocketbook of the middle class, this gives them a perfectly fine alternative.

But the politics of this abrupt tax gambit seems plain. If the tax cuts pass, President Bush can go on the campaign trail claiming four tax cuts in four years. If they fail, the president can blame Democrats for "raising" taxes. Voters who care about responsible budgeting and the debt they are leaving their children know better.