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The Most Important Piece of Paper in America

Opinion pieces and speeches by EPI staff and associates.


The most important piece of paper in America

By Jared Bernstein

I hold in my hand one of the most important pieces of paper in America: Table T08-0071, an analysis of candidate John McCain’s tax plan.

OK, it’s not really in my hand because I’m typing, but I’m looking at it carefully, and you should too. It is a table constructed by the Tax Policy Center’s steely-eyed tax analysts, and it reveals nothing less than McCain’s secret plan to diminish the US government beyond recognition. If he gets his way, conservatives will finally be able to say they’ve achieved the goal set out by Grover Norquist: to get government “down to the size where we can drown it in the bathtub.”

The numbers in the table show the revenue loss to the Federal government from McCain’s proposed tax cuts. In the far right corner is the 10-year total: -$5.7 trillion.

People deride the Republican candidate as “McSame,” implying a continuation of Bushonomics as well as the president’s foreign policy. But from the perspective of domestic policy, it’s much worse. Sure, McCain extends the Bush tax cuts but that’s the least of it. At $1.7 trillion they amount to less than a third of the damage.

Note also that the big ticket tax cuts-eliminating the alternative minimum tax and lowering the corporate tax-both follow on another Bush tradition of exacerbating market-driven (i.e., pre-tax) inequalities by cutting high-end taxes the most.

As I stresshere , McCain’s plans to pay for these tax cuts amount to filling a crater with a teaspoon of sand. Earmarks won’t get you there, so he’ll have to go after discretionary spending. In fact, he’s already suggesting a freeze in such spending, excluding defense, of course. Sound inoffensive until you consider that we’re talking about kids’ health care, education, child care, training for displaced workers, environmental and labor protections, and dozens more programs that lots of people actually need and care about.

Plus, he can’t fill the hole he’s dug with cuts in these programs either, which leads you to the inevitable punch line of all this: his target is the entitlements, Social Security and Medicare. Those programs have always been the big enchiladas for the Norquist shock troops and they’ve never recovered from their Social Security privatization defeat. Well, they’re back, incognito.

McCain’s top economist, a number cruncher of great integrity named Doug Holtz-Eakin, responds to the Tax Policy’s analysis here, and he makes a good point or two, especially regarding the way they score the AMT, but his counterpoints amount to little more than quibbles. In fact, one can’t help wonder if Doug, who used to inveigh against supply-side nonsense, has been drawn to the economic dark side. When recently asked about the extent to which these numbers fail to add up, his response was: “I think what [critics] ought to do is remember that the proposals are going to engender economic growth, which is the best thing you can do for near-term budget improvement.” That’s pure hand waving of the type with which the old Holtz-Eakin had no patience.

This story has yet to catch the fire it should, and hopefully will, once the D’s get focused on McCain and his dim vision of government. But the point born of these numbers is as simple as it is compelling:

For seven long years, we’ve tried entrusting our government to those who discredit it, defund it, and fundamentally disbelieve in its role, except when they seek a lucrative contract or a bailout. We gone down the road-and it is a crumbling road, with potholes and failing bridges — where the solution to every problem is a tax cut, where critical agencies are staffed with cronies at best and opposition lobbyists at worst, where secrecy trumps transparency and cynicism rules, where budget resources are never available for expanding children’s health care, but always there for war.

Table T08-0071 is a road map to taking us far, far deeper into this morass. We must not go there.

Jared Bernstein is a senior economist at the Economic Policy Institute in Washington, D.C.