By PAUL KRUGMAN
Published: February 11, 2005
It may sound shrill to describe President Bush as someone who takes
food from the mouths of babes and gives the proceeds to his
millionaire friends. Yet his latest budget proposal is top-down class
warfare in action. And it offers the Democrats an opportunity, if
they're willing to take it.
First, the facts: the budget proposal really does take food from the
mouths of babes. One of the proposed spending cuts would make it
harder for working families with children to receive food stamps,
terminating aid for about 300,000 people. Another would deny child
care assistance to about 300,000 children, again in low-income
And the budget really does shower largesse on millionaires even as it
punishes the needy. For example, the Center on Budget and Policy
Priorities informs us that even as the administration demands
spending cuts, it will proceed with the phaseout of two little-known
tax provisions - originally put in place under the first President
George Bush - that limit deductions and exemptions for high-income
More than half of the benefits from this backdoor tax cut would go to
people with incomes of more than a million dollars; 97 percent would
go to people with incomes exceeding $200,000.
It so happens that the number of taxpayers with more than $1 million
in annual income is about the same as the number of people who would
have their food stamps cut off under the Bush proposal. But it costs
a lot more to give a millionaire a break than to put food on a
low-income family's table: eliminating limits on deductions and
exemptions would give taxpayers with incomes over $1 million an
average tax cut of more than $19,000.
It's like that all the way through. On one side, the budget calls for
program cuts that are small change compared with the budget deficit,
yet will harm hundreds of thousands of the most vulnerable Americans.
On the other side, it calls for making tax cuts for the wealthy
permanent, and for new tax breaks for the affluent in the form of
tax-sheltered accounts and more liberal rules for deductions.
The question is whether the relentless mean-spiritedness of this
budget finally awakens the public to the true cost of Mr. Bush's tax
Until now, the administration has been able to get away with the
pretense that it can offset the revenue loss from tax cuts with
benign spending restraint. That's because until now, "restraint" was
an abstract concept, not tied to specific actions, making it seem as
if spending cuts would hurt only a few special interest groups.
But here we are with the first demonstration of restraint in action,
and look what's on the chopping block, selected for big cuts: the
Centers for Disease Control and Prevention, health insurance for
children and aid to law enforcement. (Yes, Mr. Bush proposes to cut
farm subsidies, which are truly wasteful. Let's see how much
political capital he spends on that proposal.)
Until now, the administration has also been able to pretend that the
budget deficit isn't an important issue so the role of tax cuts in
causing that deficit can be ignored. But Mr. Bush has at last
conceded that the deficit is indeed a major problem.
Why shouldn't the affluent, who have done so well from Mr. Bush's
policies, pay part of the price of dealing with that problem?
Here's a comparison: the Bush budget proposal would cut domestic
discretionary spending, adjusted for inflation, by 16 percent over
the next five years. That would mean savage cuts in education, health
care, veterans' benefits and environmental protection. Yet these cuts
would save only about $66 billion per year, about one-sixth of the
On the other side, a rollback of Mr. Bush's cuts in tax rates for
high-income brackets, on capital gains and on dividend income would
yield more than $120 billion per year in extra revenue - eliminating
almost a third of the budget deficit - yet have hardly any effect on
middle-income families. (Estimates from the Tax Policy Center of the
Urban Institute and the Brookings Institution show that such a
rollback would cost families with incomes between $25,000 and $80,000
an average of $156.)
Why, then, shouldn't a rollback of high-end tax cuts be on the table?
Democrats have surprised the Bush administration, and themselves, by
effectively pushing back against Mr. Bush's attempt to dismantle
Social Security. It's time for them to broaden their opposition, and
push back against Mr. Bush's tax policy.