August 22, 2002
Price of Tax Cuts
Paul Krugman: Bush's Populist Image vs. Elitist Policy
The federal budget is now deep in deficit, and everyone except the administration thinks it will remain there — not because of runaway spending, but because most of last year's tax cut has yet to take effect. And as my colleague Frank Rich points out, to offset the revenue losses from his tax cut, Mr. Bush would have to veto a $5 billion spending proposal every working day for the next year. Mr. Bush can no longer pretend, as he did during the 2000 campaign, that there is enough money for everything. Now, to justify that tax cut, he must hack steadily away at programs that matter to ordinary people.
Still, don't tax cuts also matter to ordinary people? It depends. Last year's rebate went to a lot of families. But the items still in the pipeline are income tax cuts for upper brackets — especially the top bracket — and elimination of the estate tax. For a married couple, only income in excess of $297,000 falls in the top bracket, and only an estate larger than $2 million pays any inheritance tax. Firefighters and coal miners don't make that kind of money.