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THE DEMOCRATS CAPITULATE TO THE SUPPLY-SIDERS


This week made it even harder to convince the voters that this country has a genuine, major opposition party. The Congressional Democrats have now completely capitulated to the Republican advocates of supply-side economics — what the first President Bush once called “voodoo economics” – by overwhelmingly voting for Dubya’s tax cut package. Only one, lone Democratic Senator–retiring octogenarian Fritz Hollings of South Carolina — had the guts to vote on Thursday against this insane tax cut. And in the House, two-thirds of the Democrats (including a lot of the so-called liberals) voted for the Bush bill, which includes more tax breaks for corporations.

 

Kerry – although he didn’t show up for the vote — issued a statement supporting the tax cuts, even though (as the Washington Post reported), they include “an array of business tax breaks” worth $13 billion to Corporate America. (On Monday, Public Campaign will issue a study of how the corporate interests bought their tax cuts with campaign cash.)

 

The folly of the Democrats’ position was underscored by a new study just released by Citizens for Tax Justice, about the effects of previously-passed Bush tax cuts on the top Fortune 500 Companies. Many of these companies made bigger profits after taxes than they did before taxes!

 

Here are some of the key CTJ findings:

 

·         Twenty-eight corporations enjoyed negative federal income tax rates over the entire 2001-03 period. These companies, whose pretax U.S. profits totaled $44.9 billion over the three years, included, among others: Pepco Holdings (–59.6% tax rate), Prudential Financial (–46.2%), ITT Industries (–22.3%), Boeing (–18.8%), Unisys (–16.0%), Fluor (–9.2%) and CSX (–7.5%), the company previously headed by our current Secretary of the Treasury.

 

·         46 companies paid zero or less in federal income taxes in 2003 alone. These 46
companies, almost one out of six of the companies in the study, reported
U.S. pretax
profits in 2003 of $42.6 billion, yet received tax rebates totaling $5.4 billion.

 

·         Almost as many companies, 42, paid no tax, reporting $43.5 billion in pretax profits, but $4.9 billion in tax rebates in 2002. From 2001 to 2003, reporting $43.5 billion in pretax profits, but $4.9 billion in tax rebates. From 2001 to 2003, the number of no-tax companies jumped from 33 to 46, an increase of 40 percent.

 

·         The average effective rate for all 275 companies dropped by a fifth, from
21.4 percent in 2001 to 17.2 percent in 2002 and 2003, less than half the statutory 35 percent corporate tax rate that corporations ostensibly are supposed to pay.

 

The feckless folly of the Democrats’ election-year cowardice in supporting this plan insures that the slashing of the social safety net will speed up to a breakneck pace in the next four years. Why? Because, to quote that WashPost article again, “With the approval of the legislation, virtually all of Bush’s first-term tax agenda — four tax measures worth nearly $1.9 trillion over 10 years — would survive a potential second Bush term.” With so much of the federal budget already devoted to mandated spending, and both Bush and Kerry committed to increasing already-bloated military budgets, about the only area of discretionary spending left to cut – to fight a budget deficit that will soar from $4.3 trillion today to $l8 trillion in the next decade, according to the Congressional Budget Office study of the just-passed bill — is, of course, the social safety net. The poor will, once again, pay for keeping the rich in clover, and the gap between the Two Americas that John Edwards likes to talk about inevitably will widen to even more shamefully uncivilized levels.

 

This me-too-ism by Kerry and the Congressional Democrats can only make it more difficult to convince voters to pull the Democratic lever in November. To understand why, take a look at two of the major, credible polls released this week. In the CBS poll, asked if it “was clear what Kerry wants to accomplish as president,” only a little more than a third of voters (37%) said it was. And the NBC/Wall Street journal poll found “just 36 percent who believe the Kerry campaign has a message.” With only 38 days left before the voting starts, those are killer numbers, far worse for the Kerry campaign than the horserace numbers in every poll showing Bush with a lead, great or small. The electorate is unlikely to embrace a presidential candidate if they don’t think he’s speaking clearly to their concerns, and they find he has no comprehensible message.

 

These polling numbers are only partly explained by the bizarre decision by Kerry and his campaign to virtually abandon economic issues in these final weeks of the campaign. Most TV commentators are saying that Kerry’s new “seven-point plan” to fight terrorism, issued today, is hardly distinguishable from what Bush is doing now (and it’s the terrorism issue that has given Bush a gender gap over Kerry among women, as the polls cited above show). And the emptiness of Kerry’s principal assertion in his much-ballyhooed NYU Iraq speech — that he could persuade foreign leaders to send their troops into Iraq to replace America’s — was again exposed by the French Foreign Minister’s speech at the UN yesterday, in which he declared that, “Neither today nor tomorrow will France commit itself militarily in Iraq.”

 

Only the debates offer a feeble last hope for Kerry to win this election. But Bush’s retorts to Kerry in them are predictable: You supported my war, and you supported my tax cuts — why, then, should America vote for you rather than me? And I don’t think Kerry has an answer that can convince wavering voters.

 

I’ll still cast an effective vote to defeat George Bush by pulling the Democratic lever — but I find that the clothespin I’ve put on my nose to take that position must pinch harder and harder as the weeks go by….

 

 

Doug Ireland, a longtime radical journalist and media critic, runs the blog DIRELAND, where this article first appeared on Sept. 24, 2004.

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