Dooh Nibor Economics

By PAUL KRUGMAN

 

 

Last week The Washington Post got hold of an Office of Management and Budget memo that directed federal agencies to prepare for post-election cuts in programs that George Bush has been touting on the campaign trail. These include nutrition for women, infants and children; Head Start; and homeland security. The numbers match those on a computer printout leaked earlier this year ? one that administration officials claimed did not reflect policy.

 

Beyond the routine mendacity, the case of the leaked memo points us to a larger truth: whatever they may say in public, administration officials know that sustaining Mr. Bush's tax cuts will require large cuts in popular government programs. And for the vast majority of Americans, the losses from these cuts will outweigh any gains from lower taxes.

 

It has long been clear that the Bush administration's claim that it can simultaneously pursue war, large tax cuts and a "compassionate" agenda doesn't add up. Now we have direct confirmation that the White House is engaged in bait and switch, that it intends to pursue a not at all compassionate agenda after this year's election.

 

That agenda is to impose Dooh Nibor economics ? Robin Hood in reverse. The end result of current policies will be a large-scale transfer of income from the middle class to the very affluent, in which about 80 percent of the population will lose and the bulk of the gains will go to people with incomes of more than $200,000 per year.

 

I can't back that assertion with official numbers, because under Mr. Bush the Treasury Department has stopped releasing information on the distribution of tax cuts by income level. Estimates by the Urban Institute-Brookings Institution Tax Policy Center, which now provides the numbers the administration doesn't want you to know, reveal why. This year, the average tax reduction per family due to Bush-era cuts was $1,448. But this average reflects huge cuts for a few affluent families, with most families receiving much less (which helps explain why most people, according to polls, don't believe their taxes have been cut). In fact, the 257,000 taxpayers with incomes of more than $1 million received a bigger combined tax cut than the 85 million taxpayers who make up the bottom 60 percent of the population.

 

Still, won't most families gain something? No ? because the tax cuts must eventually be offset with spending cuts.

 

Three years ago George Bush claimed that he was cutting taxes to return a budget surplus to the public. Instead, he presided over a move to huge deficits. As a result, the modest tax cuts received by the great majority of Americans are, in a fundamental sense, fraudulent. It's as if someone expected gratitude for giving you a gift, when he actually bought it using your credit card.

 

The administration has not, of course, explained how it intends to pay the bill. But unless taxes are increased again, the answer will have to be severe program cuts, which will fall mainly on Social Security, Medicare and Medicaid ? because that's where the bulk of the money is.

 

For most families, the losses from these cuts will far outweigh any gain from lower taxes. My back-of-the-envelope calculation suggests that 80 percent of all families will end up worse off; the Center on Budget and Policy Priorities will soon come out with a more careful, detailed analysis that arrives at a similar conclusion. And the only really big beneficiaries will be the wealthiest few percent of the population.

 

Does Mr. Bush understand that the end result of his policies will be to make most Americans worse off, while enriching the already affluent? Who knows? But the ideologues and political operatives behind his agenda know exactly what they're doing.

 

Of course, voters would never support this agenda if they understood it. That's why dishonesty ? as illustrated by the administration's consistent reliance on phony accounting, and now by the business with the budget cut memo ? is such a central feature of the White House political strategy.

 

Right now, it seems that the 2004 election will be a referendum on Mr. Bush's calamitous foreign policy. But something else is at stake: whether he and his party can lock in the unassailable political position they need to proceed with their pro-rich, anti-middle-class economic strategy. And no, I'm not engaging in class warfare. They are.

 

 

 

 

 

Some conservative pundits have said that Bush or the next president will actually have to raise taxes soon. What do you peoples think?

as much as you conservatives want to bash clinton....

 

 

 

at least he didnt rape the middle class like Dubya.

 

 

 

Anything Dubya can do to help his fellow upper class American citizens he will do.

The truth is that tax cuts are good when done correctly. The problem is the govt is spending too much on unnecessary entitlements that have become so dear tocertain congressmne that no one dares to reform or cancel them. If the spending is distributed correctly, then tax cuts will be effective across the board so that all the money govt neeeds is received and the people get to keep more hard earned money. Until then these problems will continue.

If it's Bush, we'll probably just see more cuts from nasty "liberal programs" like Head Start and Medicare.

 

They're piling up quite a Visa bill in Iraq.

A Krugman article! Ohhh my eyes!

Not as much as the visa bill we spend on food stamps to 30 year olds that have no disabilities but have been unemployed for 10 years

oh i'd be willing to bet that the visa bill is much higher than the visa bill regarding food stamps...especially considering the actions taken to try to end the problem of food stamp lifers.

 

 

but isnt food stamps a state program anyway? or am i wrong again like usual?

Oh my God!!! You mean a Presidential candidate isn't going to follow-up on some of his campaign promises?

 

Shocker. Especially since every president this side of Jefferson has done the same thing.

I have had it with the hypocrisy. A democrat increases government and we hear people just like fish fillet b***h and moan about the SPENDocrat party and how they are selling our future away. Now, because of Bush's precious upperclass tax cuts, we hear people defending his big spending. (And don't lecture me on the economy, I doubt the estate tax cut made more people decide to die in a different fashion.)

 

Can we just call him out? I mean, no matter what party we are from, Bush's administration simply sucks at close to everything. He spends too much and his tax cuts seem to not chiefly for economic reasons. Please, we don't have to pretend Kerry is some sort of fiscal conservative, but if you are going to defend Bush, at least say

 

"I love government spending, it is awesome. I love increased bureaucracy and government programs, including social ones. I hate giving hand outs to all of those lazy poor people, I would much rather give hand outs to all of those rich people. What's the difference, I don't want to cut social programs anyway, I would much rather deficit spend."

 

Say the above if you defend Bush to no end, otherwise you are being dishonest with yourself.

Thats so untrue its hilarious. Bush has increased the size of the bureaucracy which i am against but Kerry will increase that and social programs more than bush will b/c thats what democrats do (whether its right or wrong). And the tax cuts for the rich theory is such an absurdity. People that make less than 33,000 dollars are getting 100% tax cuts under bush are or you unaware of that. Of course this is percentage wise, a person who makes over a million dollars pays 40% taxes to the govt if their taxes get cut by 15% thats more i nterms of raw numbers (in dollars) than a person who makes 33,000 dollars only because the millionaire has more money to be taxed or saved. Secondly, people should not be penalized for being successful.

The richest 10 percent of americans shoulder 90 percent of the total income tax burden.

 

Tell me again why they shouldn't get cuts?

they definetely deserve cuts but the bush cuts do it for everyone not just them

People that make less than 33,000 dollars are getting 100% tax cuts under bush are or you unaware of that. Of course this is percentage wise, a person who makes over a million dollars pays 40% taxes to the govt if their taxes get cut by 15% thats more i nterms of raw numbers (in dollars) than a person who makes 33,000 dollars only because the millionaire has more money to be taxed or saved. Secondly, people should not be penalized for being successful.

 

The estate tax cut and the dividends tax cuts are two tax cuts that most definitely do not cater to those making 33,000 or less, which makes your statement untrue.

 

Quite simply, the government is too big and someone has to shoulder the burden. Now if we made everyone shoulder the borden equally by proportion, thus "not punishing people for their success", the average tax rate would be let's say about 30%. Now, let's forget the successful obviously have ways around "all of that burden" with accountants. For example, I know how much my dad makes a year and when all is said and done, he's paying a minimal amount of federal income taxes, and it is all legal. Do not think a rich person pays 40% of his salary, that is simply absurd.

 

Now, the people who end up getting screwed the most are the middleclass, because they make enough money to be taxed but not enough to prevent the government from taxing them.

 

So it is not a matter of "punishing the rich", it is a matter of "how the hell are we going to perpetuate this big ass government of ours."

 

So make your choice, less government and less taxes or more government and more taxes. In the long run, those are the only choices you can make.

 

This is what makes Bush and everyone who is defending him irresponsible. As a libertarian, I believe everyone deserves the very minimal amount of taxation. However, as long as this big ass government exists, something YOU fish fillet are defending, someone has to shoulder the burden. You tax the rich a higher proportion, they can still be rich after all of the tax breaks available. You heavily tax the middle class and poor, and all you have is a dissappearance of the middle class and even more poor, poor class. Look at Europe. You are either fabulously wealthy or in the "working class." Yes, there are people in between, but it is not the same. This is the result of high tax rates.

 

Surely, you cannot say that improportional tax rates on people who make an improportional amount of money compared to others is somehow "unfair." You cannot say we are "penializing the successful" by continuing absurd tax cuts with a budget defecit.

Geezus, then report your Dad or work to get all these loopholes and tax shelters closed. I'm not a fan of tax cuts, but please get a better argument.

Geezus, then report your Dad or work to get all these loopholes and tax shelters closed. I'm not a fan of tax cuts, but please get a better argument.

Why report him? The IRS knows what he's doing, it is perfectly legal as has been for many many years.

 

The point is someone has to shoulder the burden for the massive government that the republicans desire. You can more heavily tax the poor, but the adverse effects of taxing the poor are greater than taxing the rich, because they can afford it much less. This is not opinion, this is fact.

How am I wrong? The estate tax and dividends tax cuts definetely do not disprove my point that that with the bush tax cuts the people who mnake under 33,000 get 100% tax cuts. Previously 100% cuts existed to people that only made 14,000 or less. And no one said tax the poor, i say tax the middle class less but dont tax the upper class more. Taxing the upper class heavily does not even help the economy, if I work and make money but i have to give it up where is my incentive to be successful. Also the more money people have the more they will invest and buy proucts so more money will be circulating the economy. You cannot be for smaller government and be against tax cuts simply because higher taxes means govt has more money to spend and increase public programs

This should be fun....2 libertarians debating tax policy. I'm ready to learn a thing or two.

How am I wrong? The estate tax and dividends tax cuts definetely do not disprove my point that that with the bush tax cuts the people who mnake under 33,000 get 100% tax cuts. Previously 100% cuts existed to people that only made 14,000 or less. And no one said tax the poor, i say tax the middle class less but dont tax the upper class more. Taxing the upper class heavily does not even help the economy, if I work and make money but i have to give it up where is my incentive to be successful. Also the more money people have the more they will invest and buy proucts so more money will be circulating the economy. You cannot be for smaller government and be against tax cuts simply because higher taxes means govt has more money to spend and increase public programs

So you're a supply-sider?

I agree with Cangi by remembering one little thing:

 

The most wasteful and ineficient way to handle or distribute money is via Government.

I dont label myself as anything but I like tax cuts b/c the hard working americans get to keep their money and it stays away form the filthy paws of govt. Its better for our freedom and our economy

I dont label myself as anything but I like tax cuts b/c the hard working americans get to keep their money and it stays away form the filthy paws of govt. Its better for our freedom and our economy

Careful on your use of "hard working" and "filthy paws". That's politico-speak. A lot of hard-working people are in the lower 10% (100% tax cuts or whatever) and a lot of less-than-hard working people make a lot of money. I aspire to be one of those people someday.

The Bushites miss the point of the article. This is another clear example of Bush bait and switch. If you wanna cut taxes then fine and if you wanna compensate by cutting social programs fine. Ill give sorianofan credit for that. Thats a different debate.

 

But what Krugram wisely points out is that the administration takes credit for programs its about to cut. Its the silly supply side mentality that you can keep prosperity of these valuable social programs while cutting taxes this much and still be fine. The real puppet masters are those who know full well what GWB is doing. They want social program government gone and taxes gone. For them money, and not government should control policy. To accomplish this they know they have to trick the voting populace into thinking the government is still helping them. Those are the people who GWB clearly works for. At least admit Bush's is blatantly lying out of a particular interest or realize he is...might I say...a flip flopper? And its not just a campaign promise thing. They are hiding information

 

And fish fillet, you have an uncanny ability to defend people by arguing the "its ok, everyone does it" argument. I dont think you can act as an objective observer and critisize. Have your views but at least acklowedge when something is wrong. Unlike most democrats, I was very angry with Clinton about the Monica thing and felt he should have been punished.

 

Not as much as the visa bill we spend on food stamps to 30 year olds that have no disabilities but have been unemployed for 10 years

 

Im sick of the flaming rhetoric. Please prove that with specific numbers that show federal spending on foodstamps is higher than the spending in Iraq.

 

 

As far as the progressive tax scheme in the US, Id rather have my sympathy with a poor and middle class family than a wealthy one. Im sick of hearing my friend who's daddy bought him a Lexus b***h about how his will to succeed is being undercut.

 

Its an issue of proportions. You think it doesnt hurt me when taxes get taken out of my paycheck. Yes in flat amount its less than a wealthy person but in terms of effect on a PERSONS LIFE, I dont see how it can be. My girlfriend earned 10k from a computer programming job last summer and lost about 3k in taxes and another 3.5 k in financial aid contribution. Now she is a college student who doesnt get support fromt he folks so that loss really hurts her hard. Now is it the same percentage or amount as a person who makes 1 million dollars? No. But does it suck for her as much. Of course. But she doesnt b***h and moan and realizes its what she has to give for what she believes. And suprisingly, her will to innovate still exists.

What he said. There may be screwing around on the margins (what's the cut-off for the highest bracket? 140K?), but looking beyond to millionaire businessmen - the ones who innovate, saying they'll try less because the government will get more is silly. You can argue that increasing corporate taxes would hurt business growth, but are we talking about that?

You'd have to be pretty stupid to believe that the national food stamp program costs more than the war in Iraq. We're blowing millions a day on this war, and it's just going to run the deficit further into the ground. If we had used anywhere near as many troops in Afghanistan as in Iraq, Bin Laden would almost certainly be dead or captured by now. But of course Bush needed to settle the score with Saddam in a mad rush before the Presidential Primaries started.

If we had used anywhere near as many troops in Afghanistan as in Iraq, Bin Laden would almost certainly be dead or captured by now.

Iraq and Afganistan are fundamantally different places requiring completely different approaches. A cursory examination of the geographical terrain should make this plain even to the most casual observer.

 

Does the term "service ceiling" mean anything to you? If not, go look it up, then look up how it applies to our equipment.

 

Iraq has a port, Afganistan doesn't. Apply a few neurons and see how this particular fact applies to an army's logistics tail and ability to deliver heavy armor.

 

Iraq is well suited to the employment of conventional/reserve forces delivered by ordinary means, Afganistan plainly is not. Afganistan was a place that demanded the use of SF/SpecOps.

 

The Soviets met with disaster in Afganistan because they did exactly what you advocate. Oh a new justification for invasion...