The Bush Budget: Doing America

A neighbor, one of those "compassionate conservatives," says he doesn't know much about the details of George W. Bush's budget proposal, but he "likes that 'ownership society' thing. If the government would just get off people's backs, then more of us could get ahead, own our own, like you, like me. I'm all about personal responsibility, and so's the President. That's what America's all about."

Which means the next phase is unfolding exactly according to plan: get the rubes to buy into a shiny platitude like "ownership society" and they'll never notice as we finish dismantling America and handing off its parts to our cronies.

The Bush budget proposal is the most austere in three decades ... and it still increases the Federal deficit. What is more, Bush does not include either the cost of Iraq or any funding for his proposed assault on the Social Security system.

Consider these two facts:

Federal spending is now going down. As a share of GDP Federal expenditures will be below their 20 year average (and, unlike the President's proposal, that's including the cost of Iraq, without which Federal outlays would be even farther below the average).

Federal revenue is down even further and has been going down longer. Federal taxes on personal income and corporate profits are at the lowest percent of GDP since 1942. And overall Federal revenue is a low as it's been since the 1950s.

How can this be? Simple, the right-wing conservatives who run America are now launching the final phase of their "starve the beast" strategy to destroy the "liberal society" that they believe started with the New Deal.

Most of the plunge in revenue came from a sharp decline in receipts from the personal income tax and the corporate profits tax. It wasn't the "War on Terror" (the cost of which Bush habitually leaves out) nor was it the "Clinton Recession" (which ended three years ago). No, the revenue shortfall is the direct result of the conscious choice to slash the taxes that fall primarily on people with high incomes.

(Doubt that? While Bush was busy cutting taxes on the wealthy the payroll tax, which is the main federal tax paid by middle-class and working-class Americans, has grown to record levels.)

So, given these facts, it would seem reasonable include plans to increase revenue as a part of the budget, right?

Wrong. Instead of rolling back the recent huge tax cuts for the wealthy Bush's budget, in fact, contains new upper-income tax breaks.

Any deficit reduction will come from spending cuts: child care assistance and food stamps for low-income workers (never meant to be part of the "ownership society"), severely reductions to Medicaid for the poor and near-poor (don't vote and therefore politically expendable).

But my neighbor will tell you that his taxes are already high enough. The question is: how does he know that?

Economist (UK) - Holding the line?