Womenstake

Bush Treasury Department Official Tells the Truth about Tax Cuts

by Chad Newcomb, Senior Policy Analyst
National Women’s Law Center

An official from George H. W. Bush’s Treasury Department, that is. Here’s Bruce Bartlett, from today’s LA Times: 

The truth is that President [George W.] Bush's tax cuts didn't do much good for the economy; they were mostly giveaways to GOP political constituencies and were little different conceptually from pork-barrel spending. Although there were some good elements to the tax cuts, such as the reduction in marginal tax rates, they were fatally undermined by their temporary nature.

The fact is that the massive tax increase Republicans claim the Democrats are proposing is entirely the result of the GOP's penny-wise and pound-foolish policies. Rather than expend the effort to make their tax cuts permanent in the first place, they attached expiration dates to every major provision. Most will expire automatically at the end of 2010. The alleged tax increase that would result is simply a consequence of the tax system returning to what it was before 2001, when the first tax cuts were implemented.

…

But this isn't even the worst of the Republican dishonesty. That goes to projections from the Congressional Budget Office showing a sharp reduction in budget deficits after 2010. But these lower deficits result largely from the expiration of the tax cuts and the higher revenues that would result. Thus, Republicans are trying to have their cake and eat it too. They get to blame Democrats for advocating higher taxes while implicitly using those higher taxes to make future deficits smaller.

7 Questions with NWLC's Chad Newcomb

by Jessica Lauredan, Outreach Intern
National Women’s Law Center

This post is part of a weekly series profiling our blog authors.

Chad Newcomb is a Senior Policy Analyst who works on family economic security issues here at NWLC.

Q: What motivated you to get involved in women’s rights and economic justice?
Chad: I’ve always been sensitive to social hierarchy and discrimination. While I was in college, a student gave a speech on domestic violence and her personal experience as a target. She inspired me to start volunteering at a local women’s shelter, and I was amazed and saddened by the prevalence of this injustice. It was like uncovering Americas best-kept and silently tolerated secret. Over time I realized that we need people working on the “big picture” of women’s rights, including economic equality, through policy and research. 

Q: What brought you to NWLC?
Chad: Doing internships with state government agencies in Minnesota, it didn’t take me long to realize that many problems were coming from the federal, not state, level. I came to D.C. during the Clinton administration with a desire to provide good information to policy makers through research. 

Then Bush came along.

His administration brought a complete deterioration of federal policy. And ironically, it was not so much due to ideology as to a general disinterest in research and facts. At that time, NWLC was one of the groups working to better policy based on good information, so it was really a perfect fit.

Q: How to you manage to write such interesting blog posts about issues that some might consider not that interesting — tax policy, for example?
Chad: The topics themselves are not boring per se, they are just hard to discuss outside the realm of numbers and charts, both of which can get very boring, very fast. I think the trick is to use analogy and tie the subjects into things that people deal with in everyday life. I tend to use sarcasm and tongue-in-cheek humor — but that seems to work much better in blogs than ... say, press releases.

Bipartisan Budget Busting: Our Senate Patches the AMT

by Chad Newcomb, Senior Policy Analyst
National Women’s Law Center

Can Senate Democrats and Republicans Just Get Along?

The answer is sometimes — but that’s not necessarily a good thing.

Case in point: Last night, the Senate voted 88 to 5 to put aside its budget rules and pass a $50 billion one-year fix to the Alternative Minimum Tax (AMT), without paying for it. Everyone wants a free lunch, and there are certainly reasons to consider reforming the AMT, so what’s the problem? Well, let me just ask three innocent little questions.

First, what kind of message does this send about our nation’s priorities? Blocked by the President and a minority of like-minded extremists in Congress, the government has so far been unable to come up with the money needed for pressing issues such as providing health insurance to children, maintaining food and nutrition services, restoring cuts in funding for child support enforcement , and ensuring that low-income home heating assistance is available to those who need it this winter. But when it comes to tax cuts, money is apparently not a problem.

Second, what was so wrong with the AMT patch passed by the House last month that Republican Senators felt the need to block a vote on it? In addition to providing a temporary fix to the AMT, the House bill also expanded tax assistance to low-income working families — and paid for the changes by requiring hedge fund managers to pay taxes at the same rates as other workers. Is it possible that some people just might be more interested in protecting special treatment for super-rich investment managers than fixing the AMT or helping struggling families?

Third, how come it’s okay to break the rules and increase the deficit in this particular case? While President Bush and congressional Republicans have argued that the AMT shouldn’t be paid for because it was never intended to affect so many taxpayers, the President’s own budget relies on this revenue to return to balance by 2012. That revenue will have to be replaced somehow. As I’ve tried to convince you before, there is no free lunch. Or as our fearless (co) leader here at NWLC put it: “Tax cuts that aren’t paid for aren’t really free. Women and children who aren’t getting services they desperately need today, and children who will have to pay off our ever-growing debt tomorrow, pay the price.”

Adventures in the Real World, for a Change

by Chad Newcomb, Senior Policy Analyst
National Women's Law Center

Instead of my usual forays into Pony Land, I wanted to take a moment to celebrate passage of the Temporary Tax Relief Act of 2007 by the House of Representatives, a small but important step toward improving tax fairness. As described in more detail in our recent release, the bill would temporarily expand eligibility for the Child Tax Credit to more low-income working families, protect millions of taxpayers from the Alternative Minimum Tax (AMT), and extend other expiring tax provisions. The bill is fully paid for, in part by requiring private investment fund managers to pay tax at the same rate as ordinary workers.

For a single mom earning $12,000, the bill would mean a refund of $525 from the child tax credit, instead of zero — not enough for a pony, but a nice boost.

This is a move toward what former Labor Secretary Robert Reich calls bottom-up economic policy, in contrast to the trickle-down policies of the Bush years. Reich concisely elucidates the stark choice facing Americans regarding how our economy will be run, and for whose benefit.

Adventures in Pony Land II: The Magical Year 2018

by Chad Newcomb, Senior Policy Analyst
National Women's Law Center

Continued from Welcome to Pony Land

Last week, the House Ways and Means Committee passed a bill to prevent the Alternative Minimum Tax (AMT) from affecting additional taxpayers this year, paid for by taxing hedge fund and other private equity managers like ordinary workers. Republicans on the committee opposed the bill, arguing that AMT relief should be financed through additional public borrowing (remember, in Pony Land, deficits don’t matter). There was even a GOP amendment (link — subscription required) to repeal the Alternative Minimum Tax … in the year 2018.

When I saw the reference to 2018, I assumed it was a typo. Surely, they meant 2008, I thought. But this was no mistake; the year 2018 was chosen quite intentionally.

Why repeal the AMT in 2018, rather than next year or even next Tuesday? Because 2018 is outside the window — the Congressional budget window, that is. Since the future is uncertain (who could’ve imagined 10 years ago that Al Gore would win an Oscar?), Congress only looks at the effects of legislation on spending and revenue over a ten-year period. The new Congress instituted rules requiring that new tax cuts and increases in spending on entitlement programs be paid for over the ten-year period, so the amendment skirts those rules by taking effect far enough in the future that no one is counting.

This got me to thinking: why stop with the AMT? Why not repeal all taxes in 2018? And provide free health care, college education, and ponies for all? Just don’t expect to get a free lunch.

Welcome to Pony Land

by Chad Newcomb, Senior Policy Analyst
National Women's Law Center

As NWLC recently noted with enthusiasm, Ways and Means Committee Chairman Charlie Rangel has introduced a bill to repeal the Alternative Minimum Tax (AMT) and provide relief for the lowest-income Americans. To avoid further increasing the $9 trillion federal debt, the bill pays for these proposals by closing tax loopholes and requiring the wealthiest Americans to pay their fair share of taxes.

According to the Washington Post, Republicans are characterizing Rangel's proposal as "the mother of all tax hikes." Since Rangel's proposal was deliberately designed to leave the overall level of taxes unchanged, this claim struck me as rather bizarre. I decided to dig a little deeper and take a look at the Tax Policy Center's analysis of Rangel's proposal. It turns out that 57 percent of families (that's about 86 million if you're counting) would actually get a tax cut under the proposal, and only 2.4 percent would see a tax increase. (It's also interesting to note that among those earning below $100,000 a year, less than two in a thousand would see an increase in their taxes, while more than three of every four earning over $500,000 would see an increase.)

Can someone out there please explain to me in what universe this represents the biggest tax increase in history? Could it be the same magical Pony Land where tax cuts pay for themselves and government deficits don’t matter?

300

Chad Newcomb, Senior Policy Analyst
National Women's Law Center

Okay, so he’s not exactly Leonidas at Thermopylae (if you never studied ancient history, they made a movie), but Senator John Kyl is a man who’s not afraid to make a stand. Unfortunately, that stand is for the tiny number of wealthy Arizonans—261 per year at last count—whose huge estates paid any estate tax.

After abandoning his effort to attach an estate tax cut to this year’s farm bill (he tried a similar gambit when the bill was reauthorized five years ago), he is now threatening to hold up efforts to prevent the Alternative Minimum Tax from affecting millions of additional taxpayers (including an estimated 335,000 Arizonans, according to Citizens for Tax Justice). He is joined in this effort by Senator Lott, who stated that “There are not many people in my state who are affected by that tax.” Though willing to write off the 107,000 Mississippians expected to face the AMT next year, Senator Lott has also been a big supporter of repeal of the estate tax, which affects fewer than 100 Mississippians each year.

The Senators seem to have a little difficulty with numbers.  But that’s probably not the only reason why they think the nation can afford hundreds of billions of dollars to repeal the estate tax and extend other tax cuts for the very rich, but can’t affort to expand health coverage for low-income, uninsured children (which Senators Kyl and Lott opposed). 

It doesn’t seem like either of these Senators would’ve made very good Spartans. Instead of calling on the elite 300 to sacrifice for the sake of the larger community, they want the rest of society to sacrifice for the benefit of the 300. Oh well, I don’t think anyone would want to see either of these guys in a chlamys anyway.

The Treadmill Economy: Census Report Shows Women Still Worse Off

by Chad Newcomb

It’s the week before Labor Day, and you know what that means: time for the Census Bureau’s data release on Americans’ economic well-being: Income, Poverty, and Health Insurance Coverage in the United States.  The new data for 2006 are a mixed bag for women when compared to 2005, but by most measures women are still worse off than in 2000, even after five years of ostensible economic recovery and trickle-down tax cuts.

The worst news for women was probably on the health insurance front: over half a million fewer women had health insurance coverage in 2006 than in the previous year, and 3.4 million fewer women had coverage than in 2000.

Median real earnings for women working full-time also fell last year, for the third year in a row, but since men’s earnings also fell the wage gap was unchanged, with women still earning just 77 cents for every dollar earned by men.

The news regarding poverty was a little better, with the number of women in poverty declining by nearly half a million in 2006.  Even so, there were still 2.2 million more women in poverty than in 2000, and women remain 40 percent more likely to be poor than men.  And the poverty rate among single-mother families was at an alarming 37 percent, the highest rate in eight years.

It may seem like a cliché, but given the huge economic gains enjoyed by the wealthiest Americans in recent years, can’t we as a nation do better at providing prosperity and economic security for all Americans?

No Trickle Down, No Surprise Says White House

by Chad Newcomb and Lauren Seemeyer

A recent article by David Cay Johnston highlights government data showing that almost half of the income gains since 2000 have gone to millionaires, who account for less than one percent of the population.  A White House spokesman said this was “not a very interesting story.”  And perhaps it’s not, for those who are aware of how the administration’s tax cuts are skewed toward the rich—but Americans who have listened to President Bush’s happy talk about the economy may disagree.

For this administration, the well-being of the well-off has always been the priority, and the struggle of most Americans to make ends meet is quite beside the point.  The White House official also said that it “should not surprise anyone” that in spite of these gains for millionaires, the data showed that average income in 2005 was still below its 2000 level.  Issues of tax fairness and the lack of economic opportunity for all are no longer even given lip service.  In the words of conservative pundit Robert Novak: “If ‘equity’ were the overriding concern, there would have been no Ronald Reagan and George W. Bush tax cuts.”  I couldn’t have said it better myself.

The Issue That Dare Not Speak Its Name

by Chad Newcomb

The plight of low-income residents of New Orleans during and after Hurricane Katrina briefly forced politicians to acknowledge the problem of poverty, but the issue quickly faded into the background.  In today’s environment, where growing tax cuts for the rich are only outpaced by skyrocketing CEO pay, the unpleasant reality that 5.4 million more Americans live in poverty today than in 2000, and 3.8 million more live in extreme poverty, has received scant attention.

The truth is that there are a number of steps we could take right now that would have a substantial impact on the level of poverty in our country.  Yesterday, the Center for American Progress proposed a plan to cut poverty in half over the next decade.  Several of the group’s 12 recommendations would be particularly beneficial to women and their families.