Sen. Edward Kennedy (D-Mass.) is the latest in a string of Democrats to criticize President George W. Bush’s tax cut plan from last May. Kennedy and many in the media would have us believe the president is somehow seeking to destroy the entire nation, except for his wealthiest supporters. Such discussion of the president’s tax cut plan, however, is not based on economics, history or public opinion.
Anyone who has taken economics knows that tax cuts and government spending are two means to the same end. They are both designed to encourage production and consumption. While it is difficult to pick which is best generally, we can more easily see which is best for us right now
According to new figures from the Internal Revenue Service, the top 5 percent of tax filers paid 55 percent of all income taxes and the bottom half only four percent. Reversing the tax cut for our citizens who are already burdened with taxes will cause them to invest and save less, damaging the government’s main source of revenue. Besides, the Office of Management and Budget found that if we enacted the tax plan Kennedy desires, we would have to raise taxes on those earning as little as $40,000 a year. That means raising taxes on those who earn little more in a year than GW tuition.
How do you think consumers would react if they had to give up that much more of their income? People would spend a lot less.
Even if the field was equal and tax cuts or increased government spending would produce the same results, why would we choose to have the government spend the money for us?
Many of those who criticize the president fail to recognize that 75 percent of the tax cut has not yet taken effect. Furthermore, the only tax cut enacted so far has been the $40 billion rebate, which was the Democrats’ idea in the first place. And on Jan. 17, the Democrat-controlled Senate Budget Committee issued a report saying the recession, not the president’s tax plan, is the main reason for our national deficit.
The American people agree with the president’s plan, too. A recent poll by the Pew Center found that Republicans ranked higher on the economy by 43 percent to the Democrats’ 34 percent. The latest CNN poll shows Kennedy’s idea of terminating Bush’s tax cut losing by a 2 to 1 margin.
The idea that our economy is on a downward path is also false. According to a Fox News/Opinion Dynamics poll, more than 70 percent of Americans think the economy will be in better shape a year from now, and 81 percent feel confident about their own financial future.
It’s important to look at our history as well. President John F. Kennedy said that a “rising tide lifts all boats” and that tax cuts would benefit both the economy and government revenue. Despite criticism, JFK enacted an across-the-board tax cut that cut the top income tax rate from 91 percent to 70 percent. Remember, JFK’s tax cut ended up balancing the budget in 1969.
The president is not out to harm Americans. Bush recently said, “I think raising taxes would be a huge mistake. It’s bad for American workers. It would hurt when it comes to creating jobs. I am confident the American people agree with me as well. And if members of the House and Senate listen to their constituents and listen to those who want to find work; they will understand the wisdom of our ways.”
Wouldn’t we much rather trust an official who is focusing on the needs of American workers rather than one who is focused on criticizing our most successful?
-The writer, a junior majoring in international affairs, is public affairs director for the GW College Republicans.