Monday :: Sep 1, 2003

Time to Nail Bush on the Deficit and Tax Cut Lies


by Steve

A memo to the campaigns of John Kerry and Howard Dean, et. al, from Steve Soto, lowly weblogger.

Gentlemen:

With the economy showing some signs of life lately and with Mr. Bush somewhat frantically trying to convince people that things will get better with his tax cuts, now is the time to set the tone of the debate and the negatives on Bush and his economic record. This must be done now before Bush and Rove are allowed to set the terms of the debate and cast their version of recent economic history as the conventional wisdom. We saw in 2002 how the party’s failure to set the negatives and establish a credible version of current problems and solutions allows Bush and Rove to set the terms of the debate and use a compliant media to cover their failings. With the presidential race fully underway and polls showing we have broken through to voters on Bush’s lack of trust and integrity, now is the time to launch a full frontal assault on the incompetence and failings of this administration on its (lack of) economic stewardship.

We have known for awhile that Bush would run on how his tax cuts have led to economic growth and will (trust us) lead to jobs. But for Bush this is an all-or-nothing gamble, because either the jobs show up or they don’t. Therefore it is critical that the Democratic candidates hammer Bush on the failed promises of his tax cuts so far, as well as deconstructing his excuses for the job losses and deficits Bush has saddled us with. Since Bush has forsworn any more tax cuts between now and the election, and since any new backtracking by Bush on this subject could be a confirmation that his tax cut approach has truly failed, and since the conventional wisdom has finally been set that the deficits are already way too high, we can be sure that Bush is going to live or die on his sole economic tool between now and next November: his tax cuts to date. Nothing Grover Norquist or Tom DeLay can do anything about that.

As of right now, Bush has lost well over two million manufacturing jobs since he has been in office, and even the National Association of Manufacturers believes that at best with a 4% GDP growth in 2004 only a quarter million of those jobs will return by the election. Given the increasing gas and energy prices consumers are facing at a time of less than stellar wage growth, and the dampening effect of state and local government cutbacks, even a defense industry-led recovery may not bring a 4% GDP growth next year, especially since the mortgage refinance market has all but dried up as well. So Bush’s chances of seeing a job growth figure of anything close to a half million jobs between now and November 2004 are nil. As a result, Bush will base his snow job to voters on the promise of what his tax cuts will do in the future, as well as his revisionist history of what has transpired so far.

It is already so bad that Bush’s team realizes that their cupboard is bare of new initiatives, and they need to talk about optimism (like they did a year ago when they told us things would get better) and the future to make up for that. So what was Bush’s answer for the declining manufacturing base today in his appearance before a union event? Aside from telling the crowd that his tax cuts will work (again, his all-or-nothing hope), Bush promised that he would establish a new Assistant Commerce Secretary position to advise him and buddy Don Evans on how to restore the manufacturing base. (Imagine the GOP reaction if Clinton had done that.) If Bush and the rest of his “best and brightest” group of MBAs don’t know how to do address the shrinking manufacturing base without stooping to this pathetic and time-honored GOP maneuver of “let’s appoint someone or name a commission to study this because we either have no answers or don’t want to do it anyway and we’re stalling for time”, then they are more pathetic and incompetent than we thought.

Let’s look briefly at the standard Bush line. Bush says he inherited a recessionary economy. In fact, the economy didn’t slip into recession until March 2001.

Bush says his tax cuts helped get the economy out of its recession sooner than it would have. Yet the National Bureau of Economic Research says that the recession ended in November 2001, less than three months after his first tax cuts were passed. So in order for the first Bush tax cuts to have had a measurable effect on the recession, they would have had to work very fast.

Bush says the deficit has grown because of three things. First, he says that the recession caused it. Yet as I said the NBER asserts that we were already into positive economic growth by December 2001 so the recession cannot be blamed for the deficits.

Second, he says that 9/11 caused the deficits. Yet again, the NBER says we had returned to positive economic growth by December 2001, less than three months after 9/11.

Third, Bush says that the war on terrorism has caused the deficits. Yet our only direct costs from the war on terror would be the Afghanistan campaign (which ended quickly and failingly), military operations around the globe (for which Bush will never reveal the true costs), and the costs for the Department of Homeland Security (which were to be a net zero since the department was to be a melding of existing department functions and authorizations) and assistance for state and local governments, (which hasn’t been coming from the federal government anyway.)

Fourth, Bush says the war in Iraq has caused the deficits. Yet we now know that the Iraq war was not a war of necessity, but a war of Bush’s timing and choosing. There was no national security imperative for the United States to invade and topple Saddam Hussein in March 2003. Nor was there inevitability for an ongoing cost of $4 billion a month in direct military costs and upwards of $30-100 billion more in reconstruction costs borne by the United States alone. These costs, and the responsibility for these obligations and the deaths resulting from this illegal act, as well as the resulting spiraling deficits rests solely with George W. Bush.

The simple truth as I noted in referencing the Center on Budget and Policy Priorities study of last week is that we have spiraling deficits due to the usual two reasons. We have declining revenues caused by Bush’s tax cuts and a slowly recovering economy, an economy hampered by business uncertainty and unwillingness to hire, coupled with sporadic and inconsistent consumer spending fueled by a now drying up mortgage refinance market. Recent economic growth spurred by the defense industry is not a recipe for broadbased countrywide growth. The second reason for the deficits is spiraling spending led by the aforementioned defense industry, and a now unrestrained GOP-led Congress handing out goodies to buy votes, with a White House (according to the Cato Institute) that talks a good game about controlling spending but hasn’t done any of it since coming into office.

Reasonable people can argue about what it will take to restore us to solid ongoing economic growth. But clearly Bush’s prescription of more tax cuts, ruinous fiscal irresponsibility, and prayer is much less credible than a Democratic alternative of repealing the top bracket tax cuts, balancing the budget, and temporary assistance to state governments. Like the rest of us, Wall Street watches the long-term deficits, and knows that a country that is going broke while ignoring critical needs isn’t the place to make long-term investments and create jobs.

It is time for the Democrats to attack Bush’s version of history and excuses for the deficits and job losses, and establish the negatives. It is time for the Democrats to plant the seed in voters’ minds that tax cuts, praying for the best, and budget busting isn’t a domestic policy that creates jobs now or a solid future for our children. Since the credibility argument for Bush has been lost, now is the time for Dean and Kerry to assert that the Bush lies extend beyond Iraq to here at home as well.

Don’t let them get away with it again, like they did in 2002. Educate the voters before Bush and Rove snow them again, this time on important things here at home that will affect our children for years to come.

Go on the attack fellas, and do it now.

Steve :: 10:34 PM :: Comments (3) :: Digg It!