Those of us cursed with functional memories can recall pretty accurately the debate surrounding the various rounds of tax cuts enacted during the bush Dark Ages. Being one of those people, I have had a hard time following the script this time out as our Most Serious Leaders pretend to carefully weigh the pros and cons of giving yet more trillions to the most affluent among us.
As I remember it, these massive cuts, heavily weighted toward the rich, were designed to happen only if they didn't blow a huge hole in the (then surplus) budget, and were specifically targeted at the wealthy because they would function as an economic stimulus to spur the sputtering economy and bring us all golden ponies. (Ok, i made up the ponies part - it wasn't even an internet meme back then).
A little bit of googling confirmed that my memory, and not the drivel we are hearing today, is accurate.
Some fond memories from the Two Party Tango over merely the first round of wealth redistribution, and curtain calls from the likes of Larry Craig below the fold.
from PBS Newshour, March 8, 2001, discussing the inside baseball of how the Senate might act to enact the cuts
As a result, we have what's called budget reconciliation, a process where budget... and in the budget, there will be a fixed figure that will say, up to so much will be allowed for tax cuts.
Sen Larry Craig (R- Minneapolis airport, stall#3)
So reconciliation is OK. Good. got it.
on the fiscal responsibility of a massive tax cut, same program
What will we have to cut to achieve this $2.6 trillion tax cut if you take the total involved that the President's asked for? And I think a lot of us want to ask questions, too, about whether or not the projected surplus of five or ten years from now is really something we can count on.
Sen Dick Durbin (D- Earth)
So, if these tax cuts blow a huge hole in the budget, they're a nonstarter. Or at least, after a decade, we'll have to pull the plug, because at $2.6 trillion, that's some crazy ass shit, right there.
Well. That makes the current 2010 debate open and shut now, doesn't it? That "projected surplus"? Um, not so much. What was cut to pay for it? Nothing. It was all borrowed from China and Saudi Arabia (a country that gets far too little ink as our #2 creditor). Politicians looking to extend these tax cuts are demanding more debt, over a longer period. Anyone with an underwater mortgage can tell you exactly what that does to the payment plan.
DiFi, anything to add?
the tax package is back loaded where the surplus figures are the most ephemeral. So we have very serious concerns about this,
Ok, good. She's on the case. Already aware six months before 9/11 changed everything that the surplus was baloney, being bled dry by economic reality. Also, she was totally hip to the fact that Republicans were busily hiding the true extended costs of these cuts to make them appear more fiscally sound. I'm sure she will remember this comment with absolute clarity as the debate resumes.
Of course, no panel discussion is legitimate without the ramblings of at least one of the Maine twins, so here ya go:
given the high tax burden in America, as well as the declining economic growth... Dianne and I and others joined yesterday in proposing a trigger that we would ensure that we would have a mechanism in place to assure that we stay on track for surpluses that hopefully we expect to materialize over the next ten years. Given the fact that we could have projections go 50 percent either on the plus or minus side, all the more important that we make sure that we stay on track for debt reduction over the next ten years and not jeopardize this window of opportunity that we have for financial stability and sustaining an era of surpluses.
Sen Olympia Snowe (R - Shapeshifter)
Wow. How...reasonable. If you disregard the "given" of a high tax burden in America, which is only a given if compared to Nirvanas like Somalia, but is very low when compared to any other industrialized nation. It's a darn good thing all those pragmatic centrists we are told to worship stuck to their guns about that trigger mechanism, or we could have ended up with a gigantic deficit...oh, wait.
Senator Craig, you're tapping your foot. Is that impatience? You have the microphone
California economy's in trouble, partly because of energy and partly, in my opinion, because they need a good tax stimulus at this moment to kick them, start again and get them moving. I think we can produce a very sizable tax cut. We will pay down the debt substantially. And what most don't want to admit, Washington, DC, is awash in America taxpayer surplus money.
There's that word again. Stimulus. Cutting taxes stimulates the economy, you say, without any evidence. Especially if it's a $2.6 trillion stimulus comprised entirely of tax cuts skewed heavily toward the rich, during a recession that compared to this one is better called "recess". But a stimulus of less than a third the cost, aimed directly at the people suffering the most from a republican born megarecession, that itself was one-third tax cuts, that was government gone wild.
mmmmkay.
But anyway, after these cuts are enacted, it should be pretty easy to see their effects. And if they don't have the desired effect, they can be rescinded with this trigger mechanism, right? Or, worst case, they can be sunsetted after a decade to stop the bleeding. What a relief. To even consider a case worse than that, say a massive deficit met with such incredible political cowardice that a huge bleeding wound in the Treasury would be widened, is just crazy loony hippie scaremongering. Try to Be Serious.
But wait, I am hearing a completely different rationale for massive tax cuts from the same show, different day (PBS online newshour 2/7/2001):
JIM LEHRER: Sir, what is the principal purpose of the president's tax cuts?
(treas sec) PAUL O'NEILL (before he was exposed as a heretic): To take the marginal tax rate down, to provide a doubling of child credit, to bring relief to... for married situations where people are being penalized for being married and to eliminate death taxes. In a broad sense it's to bring a fairness to the tax system that we have and to use the fact that the current structure of the tax system is producing enormous excess funds over what are required to fund agreed public purposes, and to give the money back to the people who send it in.
What's missing in this impassioned plea to give these onorous tithes back to the poor newlyweds and orphans was the stark truth that the vast majority of this was nothing more than a wealth tranfer via the IRS from all of us to the top 1%. Those newlyweds and orphans are much, much worse off today than in 2001, of course. The rich? Never had it so good, and the future's so bright I gotta wear shades. Designer shades.
Another piece to chew on is the whiplash assertion that the cuts were never in response to the economic slowdown of '01, but were simply in response to an ideological imperative. This was actually quite telling, imo, especially considering what became of Mr O'Neill. He was unwilling to proffer the canard that tax cuts are stimulative to the economy. I'm guessing that's because it's not true. This was a serious problem, and was dealt with effectively by firing Mr O'Neill.
Robert Rubin was far harsher (and a whole lot closer to the actual facts)
Newshour, 2/23/2001:
I think it's a very, very serious error of economic policy.(snip) I think that the Bush tax cut as announced would undermine fiscal discipline. I think there's a high probability it would lead to deficits snip) And I think those kind of deficits could lead to exactly the kind of economic conditions that we had in the early '90s. (ok, THAT was wildly optimistic - diarist)(snip) virtually all mainstream economists would agree that... do agree that a tax cut enacted this year is likely to have relatively little stimulative effect in this year. But if what you want is a stimulative effect from a tax cut this year, then you can do that with a moderate front-end loaded tax cut. Most of the proposed tax cut has absolutely nothing to do with economic conditions this year or, for that matter, even next year, (snip) you could accomplish the exact same purposes with the a moderate front-end load tax cut, and I would aim it towards middle- and lower-income people because they have a higher propensity to spend. (snip)the most affluent people in our society benefited most during the 1980s, and even during the 1990s, when all incomes rose, they benefited most. So I think that a tax cut should be aimed at middle-income people and working people. You might want to have some adjustment for the most affluent, but I wouldn't do very much in that area. (snip) About 40% of this tax cut is estimated to go to the top 1% of taxpayers, and they're the people who have done best over the last ten years and also the last 20 years.
This argument can be used today without changing a single word. Except take every instance where Rubin says "I think" and replace it with "It has been proven". Don't let anyone tell you that "no one could have foreseen" the economic impacts of such recklessness.
But in the interest of being fair & balanced, let's hear from another zombie, former quarterback Jack Kemp (R-Buffalo Bills) PBS newshour, 2/26/2001:
Well I would look at it a little bit differently, looking at it at $1.6 trillion over ten years is kind of the aggregate in a static sense. And if nobody did anything with their new lower tax rates, you'd probably lose $1.6 trillion, but many of us believe that as rates come down, you increase the rate of return on working and saving and investing in this economy, and there would be a feedback. Of course that would be debatable, you know? Friends on the left say it would ruin the economy as Bob Rubin told you Friday.
Friends on the left had it exactly right.
As usual.
But just how wrong was McFumbles? Here's a mashup from that same interview;
Congressional Budget Office is understating the surplus. We have estimated surpluses over the next ten years of 5.6 to $6 trillion. We think that's about two trillion off...There is a clear feedback effect from cutting the capital gains tax. It should be eliminated...The way to get more revenue for the government is to bring down the rates... I do part company with those on the right and on the left who say we should use this tax code to pay off this debt. That would be silly...
Silly Wabbit. Deficits don't matter. Dick Cheney said so.
But now they're more critical than air.
Huh.
And his numbers are almost exactly as far off as Paul Wolfowitz' estimate of the costs of invading Iraq: By orders of magnitude. So how wrong was he?
Completely.
100%.
The tax cut package #1 passed in May, 2001, at an initially pegged cost of $1.35 trillion over the now-just-completed decade. That's almost twice as expensive as the hated stimulus (which that kooky CBO said saved over 2 million jobs), and more than the cost of the Iraq War (so far, and by some measures, anyway). It got the support of 12 Democratic senators, including one Diane Feinstein. It also contained no trigger (hmm, didn't that red herring show up in the HCR debate, too?), no cost cutting measures, and was heavily skewed toward the wealthiest Americans. Here's what a few of our best and brightest had to say immediately after passage;
The rate where the vast majority of taxpayers pay taxes, the 15% bracket, is the only one that doesn't get a rate cut. And I guess we know why that would be true: Because they need the money to give the lion's share of the break to the wealthiest among us. - (Kent Conrad, noted communist)
I really do believe that it is structured with a political and fiscal balance that will be necessary...in order to achieve a significant tax package for the American people. -(Olympia Snowe, Perennial Keeper of the Trigger that Magically Disappeared)
Here's the reality. (warning - pdf)
We should have spent it all on Hookers&Blow (relax, they're a band.)
Essentially, all of the warnings from the loony left were true, none of the benefits materialized, and there was no safety valve in case something that "nobody could have foreseen" happened and created an urgent need to mobilize the military and/or create and maintain a massive domestic surveillance apparatus. Something that could occur on a sunny Tuesday morning in September of that same year.
But even that did not deter the True Believers and method actors. The justifications for the next two rounds of reverse Robin Hoodism were even flimsier, and received just as much serious scrutiny (or even less; criticism of Dear Looter had become distinctly unAmerican by 2003).
So here we are in 2010, with every single justification for the massive looting of the Treasury completely in ruins, the surplus transformed into the largest debt ever recorded in the history of lending money, a Democratic President, Democratic majorities in both houses of Congress, and a plan already put in place by the former Republican Congress to let these reckless tax cuts expire.
I'm sure we'll do the right thing, the moral thing, the fiscally responsible thing this time around, won't we? I mean, ideology aside, if beating yourself on the head with a hammer doesn't cure a headache, you won't trust the guy that says your problem is too small a hammer, right? Right?
So, Lucy, you just hold that football, and I'll get ready to kick it.