The Tax Bill & the D's

Max Sawicky sawicky at
Sat May 26 11:43:14 PDT 2001

For a lot of people, this year's rebate will be bigger than their tax cut. $600 bucks. Yum yum. I'll take it.

The irrationality of the 'moderates' in both parties who uphold fiscal responsibility is grossly manifest. I'm talking about any Senator who made a big deal out of voting for a $1.35 trillion tax cut "instead" of what was reputed to be Bush's $1.6T package. They kept the bill within the $1.35 limit by sunsetting the whole thing in 9 years. In other words, they 'cut' the cost by omitting the 10th year in the calculations. They did the same thing in five years with at least one of the smaller provisions. So clearly the 'moderates' are not motivated by fiscal discipline or the bond market, but only in protecting their own sorry asses from Bush voters.

If the budget projections go south (unlikely, in my view), the sunset does provide an opportunity to revamp the tax code. But after 8 years, with most of the plan phased in, and a few lucky people salivating over imminent estate tax repeal, obviously changing the thing in a positive direction will not be easy.

Some credit is due to Olympia Snowe, who successfully held out for a liberalization of the child tax credit-- making it more refundable for more low-income families.

My project, not that anybody asked, is to highlight the more-or-less unchanged problems with the EITC and complexity surrounding the interaction of the EITC with the child credit, in contrast to the simplicity of a unified refundable credit. I've done a new form for the Cherry-Sawicky credit that only requires 8 lines. It fits on a postcard, and I've printed some up. Next time I'm on the tube I'll be waving it around like a madman.

A unified refundable credit is less expensive relative to the new tax code, since Bush's increase of the child credit soaks up a good bit of the incremental cost. I may buy a pistol, so that the next time somebody says my proposal "costs too much" I can whip it out and shoot them.

Bush's expanded credit takes nine years to phase in, so if the age limit is 17, as for the present child credit, if your kid(s) are older than ten, you will never see that thousand bucks (actually worth less in today's dollars, btw).

My other focus is on the run-up to TANF ("welfare reform") reauthorization next year. One job is to deflate the disinformation about program outcomes, and a second to monitor the rise of contracting (small, so far). The most promising progressive approach is to push for TANF jobs to be real, meaning susceptible to labor standards and unionization. Note in re: the 'living wage' & the new child credit that a $15,000 job can get cash checks for both the EITC and the child credit. $3,400 from EITC and $750 from the child credit, tax free. For a full-time worker, this adds more than two bucks per hour, after tax.

The Democrats never seriously offered a progressive alternative tax cut. That's why they lost, IMO. The advocates, with the exception of the Childrens Defense Fund, echoed the Dem leadership's politically bankrupt (literally, now) fiscal discipline line.

Even worse, they have said if $1.6T is used for a tax cut, there is no money left for anything else. So if they get Congress back in 2002, is their position going to be, there is no money for anything else?

Given the Dems enthrallment to Wall Street, the difference in regimes will be in the spheres of judicial appointments and regulation (which doesn't show up as a budget cost). Important areas, but ones fundamentally incapable of moving the U.S. towards social-democracy. For that you need big bucks.


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