pushing a "$674 B" tax cut plan

Daily Howler:
"...In particular, the Post screamed about the unannounced “Trojan horse” Bush’s budget contained, that $1.5 trillion in new proposed tax cuts. In the past few weeks, the president had gone out and misled us again, letting us think that he was proposing about $674 [billion] in new cuts. On Monday, the larger package showed up unannounced in his new budget plan...
Meanwhile, Weisman’s piece today offers only a hint that something odd has occurred: 
WEISMAN (pgh 5): One GOP senator said yesterday that Republicans are worried Bush is “overreaching” by pushing for larger tax cuts than “he originally let on but at the same driving up deficits” to new heights.
A GOP senator notes that Bush’s proposed cuts are “larger than he originally let on.” Pravda-trained readers will take meaning from that, perhaps realizing that Bush has now submitted cuts than that are twice the size of the cuts he had seemed to disclose. On Tuesday, the Post recoiled at Bold Leader’s conduct. Today, a reader would have to do between lines to learn that massive new cuts have in fact been proposed...
Has a bigger fake ever lived in the White House? As a candidate, Bush faked and falsified his actual values, making us think that he was carefully calibrating his tax cut plan to produce long-term balanced budgets. We were told that the tax cut package of $1.3 trillion over ten years was all that the numbers would allow. But in 2001, Bush passed a slightly larger tax-cut plan—and now he seeks additional cuts that are even larger than that initial package, the one over which he pretended to agonize. Plainly, Bush’s ongoing conduct bears no relation to the posing which drove his campaign. And he presents this new plan in the dead of the night - refusing even to tell his subjects about his new, large proposals. What kind of a man behaves in this way—hiding behind a war and a space disaster to peddle plans he’s too craven to acknowledge? Perhaps you know what kind of man—a Dear Leader behaves in this way..."

referred to his tax cut proposal as a $674 billion 10-year plan

"Under this plan, 92 million  Americans receive an average tax cut of $1,083," Mr. Bush said.  "That's fair." 

 Washington Post:
"...No, it's deceptive. The vast majority of taxpayers -- 80  percent -- would receive less than that amount, according to data from the Urban Institute-Brookings Institution Tax  Policy Center. For the truly typical household -- filers  in the middle fifth of the income spectrum -- the  average tax cut would be $256. Almost half of all taxpayers would see their taxes drop by less than $100.  At the top of the income pyramid, however, the tax  savings would be huge; the top 1 percent of filers would  receive an average tax cut of $24,100. The average tax  cut touted by Mr. Bush is more than $1,000 only because the savings for the wealthiest Americans are so large..."

Also see CBPP, Spinsanity, PLA, Daily Howler

"...In the section titled "For Everyone Willing To Work, A Job", Bush claims that "32 million seniors would receive, on average, a tax cut of $2,042." But his official talking points actually claim far less, stating that "13 million elderly taxpayers would receive an average tax cut of $1,384"..."

"...the Administration says the average tax cut among six million single women with children would be $541..."

"..."under this plan, a family of four  with an income of $40,000 will  receive a 96 percent reduction in federal  income taxes...The income taxes would  drop from $1,178 a year to $45 a year."  The White House fact sheet similarly claims  that "A typical family of four with two  earners making a combined $39,000 in income would receive a total of $1,100  in tax relief under the President's plan."..." 

 Spinsanity:
"...Both claims are misleading in that they carefully select  a household which would benefit disproportionately for  its income level. As noted above, according to calculations  by CTJ, the middle 20 percent of earners, who make an  average of $36,600 per year, would receive an average  benefit of just $289. The White House's theoretical family  does better than this by virtue of having two children,  allowing it to take advantage of  the additional child tax credit. It also benefits from the accelerated marriage penalty phaseout..."

Spinsanity:
"...Bush claimed on April 24 that "If you're a family of four, making $40,000 a year, this tax plan will reduce your taxes from $1,178 to $45 -- a family of four, $40,000." He then suggested a few moments later, "that thousand dollars a year will mean a lot. Tax relief is good for the average citizen." He has repeated the statistic on a number of occasions, most recently a May 6 speech to the US Chamber of Commerce. 
As we have pointed out before, while the tax reduction Bush advertises for this theoretical family is technically correct, it benefits disproportionately for a household of its income level. Bush's suggestion that the hypothetical family's benefit demonstrates that "[t]ax relief is good for the average citizen" is also misleading and unrepresentative..."

Bush

"...Earlier this month, speaking to the U.S. Chamber of Commerce in Washington, Bush explained, "You'll hear all kinds of rhetoric about how this plan is not fair. Well, let me just describe to you what it means to the family of four making forty thousand dollars a year. It means their taxes would go from one thousand one hundred seventy-eight dollars a year to forty-five dollars a year. ... That sounds fair to me."..."

 Jonathan Chait (The New Republic):
"...The clear impression is that Bush is fighting to cut taxes for middle-income families, and Democrats (along with some moderate Republicans) are resisting. In fact, this is the opposite of the truth. First, the $40,000-per-year family won't pay only $45 in taxes, since they'll still owe $6,120 in payroll taxes, which Bush ignores. Second, their savings from the Bush plan would come from three elements: increasing the child tax credit ($800), expanding the level of income subject to the low 10 percent tax bracket ($100), and reducing the "marriage penalty" ($233). These cuts, all of which enjoy broad bipartisan support, would only cost $157 billion over ten years--less than one-quarter of the total cost of Bush's plan. What have drawn real opposition are Bush's upper-bracket rate cuts and his repeal of the dividend tax, which will cost in excess of $500 billion over the next ten years and will benefit the rich almost exclusively. Bush could have won a sweeping majority for the middle-class cuts if he had dropped his insistence on the upper-class ones. But he didn't, because the former are merely a sweetener to help him obtain the latter. Indeed, when the Senate voted to reduce the size of the tax cuts, conservative Republicans suggested removing the middle-class provisions altogether so they could squeeze in more upper-bracket cuts.

Andrew Lee, Isaac Shapiro (CBPP):
"...The family of four making $40,000 would receive a 96 percent cut in federal income taxes. The family’s federal income tax liability would fall from $1,178 to $45.  This family, however, pays much more in federal payroll taxes than in federal income taxes.  When one includes just the family’s employee share of $3,060 in payroll taxes, they would receive a more modest 27 percent cut in federal income and payroll taxes.  Furthermore, most economists have concluded that workers bear the burden of both the employee and the employer payroll taxes, with the employer portion being passed on to workers in the form of lower wages.  If one includes both the employee and employer portions, the family pays $6,120 in payroll taxes and would receive a 16 percent reduction in federal income and payroll taxes under the Administration’s plan. 
A recent analysis from the Urban Institute-Brookings Institution Tax Policy Center shows that among tax filers with wage earnings, 90 percent of those with income below $100,000 pay more in payroll taxes than in individual income taxes.*..."

"...The administration's fact sheet also  suggests that beneficiaries of the tax cuts  will include "Everyone who pays taxes,  especially middle-income Americans, as tax  rate reductions passed by Congress in 2001 are made effective immediately." Bush,  referencing the 2001 tax cut that he  is proposing to accelerate, made a similar assertion yesterday, claiming that "it was tax relief for all citizens. We've reduced the tax rate for everybody  who pays taxes."..." 

 Spinsanity:
"...Both of these claims, while appearing to be expansive,  depend on narrowing the definition of "taxpayer" to  include only those paying federal income taxes.  Many workers in lower income brackets pay no federal  income taxes, but do have Social Security and Medicare  taxes deducted from their paychecks, pay sales and excise  taxes, and sometimes pay state income taxes. Because  they will not benefit from the proposed federal tax rate  reductions, only those few with dividend income  would realize any benefit from the current proposal...."

"...Another argument that administration officials make regularly is that under the president's plan, the wealthy would bear a larger share of the nation's tax burden than they do now. A table released last month by the Treasury's office of tax analysis showed that people with incomes over $100,000 would see their share of all income taxes rise to 73.3 percent from the current 72.4 percent. At the same time, the table showed, taxpayers with incomes of $30,000 to $40,000 would get a 20.1 percent reduction in income taxes, and those earning $40,000 to $50,000 would get a 14.1 percent cut...."

"We estimate that 23 million  small-business owners across  America will receive an average income tax rate cut of $2,042," Mr. Bush said. "That matters."

 Washington Post
:"...Again, misleading. As with the individual taxpayer  statistics, the Tax Policy Center estimates that nearly  four out of five tax filers with small-business income  would receive less than that amount. More than half  would receive $500 or less. Nearly a quarter would receive no tax cut at all -- a group that doesn't drag down  Mr. Bush's average because it's simply not included  in the calculation. But a small number of wealthy  individuals with small-business income would  receive huge tax cuts, once again inflating the average..."

Also see: Paul Krugman (NYTimes)

"...In his radio address, the President also echoed a claim contained in a recent Treasury press release that small business owners would benefit greatly from his proposal to accelerate the reduction in the top income tax rate, because two-thirds of those who pay the top rate are small business owners. .."

"...In instances where both the corporation and the shareholder are paying taxes at the maximum rate, it is possible, as the administration maintains, for 60 percent of the profits to be taxed away..."

"...The President doesn't look at the American people and say, I'm from the government, I know who the right people are -- I'm from the government, I know who the wrong people are. The President believes that's a divisive approach."..."

"..."I understand the politics of economic stimulus, that some would like to turn this into class warfare," Bush said last week as he was giving reporters a tour of that very nice ranch he owns in Crawford, Tex. "That's not how I think."..."

"...it's inaccurate to say that the benefits will go to the wealthy" and that "because it's inaccurate, [this criticism] is used in...a way to divide and to play class warfare, in an effort to portray some Americans as unworthy of tax relief and other Americans as worthy of tax relief based on their class."..."

Bush

"...PRESIDENT BUSH SAYS that, when crafting a tax plan, the government shouldn't be in the business of picking winners and losers..."

Washington Post:
"...PRESIDENT BUSH SAYS that, when crafting a tax plan, the government shouldn't be in the business of picking winners and losers. But the tax bills making their way through Congress do precisely that -- and you can probably guess how things are turning out. The winners are those at the top of the income scale, and not just because they pay more taxes to begin with. Both the House and the Senate would speed up cuts in individual income tax rates passed in 2001. For three income brackets, rates would drop by 2 percentage points. But the top rate falls by 3.6 percentage points, from 38.6 percent to 35 percent. One argument for this is that it would help small businesses, many of which pay taxes at individual rates. But only 2 percent of taxpayers with small-business income pay the top rate -- and many of these are not mom-and-pop businesses but rather wealthy individuals with complex tax returns full of partnerships and royalty income and the like. The losers are those near the bottom: low-income working families eligible to receive money under the Earned Income Tax Credit..."

"..."Let me address," he said, "one thing about why this issue about who benefits from tax cuts, I think, is such a different issue in Washington than it is in the real world. If you make $30,000 a year, and you pay, for example, $2,000 in taxes, and you receive a $1,000 tax cut, you just received a 50 percent cut in your taxes. A thousand dollars to somebody who makes $30,000 a year means all the world to them. It is a huge difference in their life. Take somebody toward the top end of the scale, somebody who makes $200,000, and they pay $50,000 in taxes. To begin with, they pay far more in income taxes, a point which opponents of the President never make. They pay far more in income taxes than others who earn less. They receive a tax cut that in dollar amounts may be larger than somebody who receives less. To them, that tax cut won't change their life as much as it does somebody who doesn't earn as much. Their life will change more so, more beneficially, than somebody toward the top."..."

Compassiongate: Note that the mendacity compassion on tax cuts is so robust that arguments are being made for tax cuts from completely contradictory positions. The supply side tax cut push (previous row) makes the exact opposite case for why these tax cuts need to focus on the rich. 

"...Oh, you'll hear the talk about how this plan only helps the rich people. That's just typical Washington, D.C., political rhetoric, is what that is. That's just empty rhetoric..."

"...declared several weeks ago in promoting his proposal, “My jobs and growth plan would reduce tax rates for everyone who pays income tax."..."

"..."It means that 10 million seniors,  nearly one in four, who receive  dividend income will get relief,"  Mr. Bush said of his plan to cut  dividend taxes. "Now, that's important. Getting rid of the  double taxation of dividends is  an incredibly positive thing for the quality of life  of our seniors."

 Washington Post:
"...Some seniors would see their quality of life  improve a lot more than others, however. You  can probably guess which ones. A big slice of  the dividend tax cut -- 37 percent -- would indeed go  to seniors. But the majority of elderly people -- the two-thirds with incomes below $50,000 --  would save on average $325 or less. Meanwhile, a small  number of high-income elderly would reap most of the  benefits. More than three-quarters of the part of the  dividend tax break that would go to the elderly would  flow to the 19 percent of senior citizens with incomes  above $75,000; 43 percent of the benefits would  go to the richest in that group, the 2.5 percent  of senior citizens with incomes greater than  $200,000. They would save an average of more  than $5,000. Mr. Bush must know how phony his  "averages" are. Any time a salesman has to resort to  such deceptive tactics, the customer ought to  be wary about what is being sold...."

Also see CBPP

"...talking points state that "[a]lmost half of all savings from the dividend exclusion under the President's plan would go to taxpayers 65 and older. The average tax savings for the 9.8 million seniors receiving dividends would be $936."..."

"...Press Secretary Ari Fleischer elaborated on the putative benefits to seniors with an array of statistics during a briefing on the plan on January 7: Of the 12.6 million taxpayers 65 and older with income over $15,000, 58 percent receive dividends...There are 8.2 million taxpayers 65 and older with income over $30,000 a year, 66 percent of them receive dividends. So clearly, the number of seniors receiving dividends goes down far lower on the income scale [than reporters had implied in questioning him]..."

"...Bush political adviser Karl Rove  said Bush's plan to abolish the  dividend tax was evidence that he's  "a populist. Give him a choice between  Wall Street and Main Street and  he'll choose Main Street every time." As evidence, Rove argued that "45  percent of all of the dividend income  goes to people with $50,000-or-less  incomes, family incomes. Nearly  three-quarters of it goes to  families with $100,000 or  less family income."..."

"..."Other critics have suggested that ending the double taxation of dividends is somehow tilted toward a small number of wealthy beneficiaries. The fact is that 54 million Americans own stocks that pay dividends." He then argued that "45 percent of all dividend recipients make under $50,000 per year," while "[t]hree-fourths of them make less than $100,000 per year."..."

"...suggested that the economic projections put out by the Blue Chip Economic Forecast, a survey of 53 private-sector economists, are predicated on the passage of his tax cut proposals...White House Press Secretary Ari Fleischer made the same claim in a press briefing just prior to Bush's speech..."

"...In Ohio last month, Bush said senators "might have some explaining to do" for approving "a little bitty tax relief package" of $350 billion. "The package ought to be at least $550 billion in size over a 10-year period in order to make sure that the economy grows," he said..."

CBS News:
"...President Bush celebrated a package of tax cuts..."This achievement is a victory for every family struggling to pay the bills, every entrepreneur hoping to expand the business and create new jobs and every American looking for work."...Mr. Bush's enthusiasm contrasted with his earlier criticism of a package that was even larger - the $350 billion version originally approved by the Senate. 
In Ohio last month, Mr. Bush campaigned against that bill and insisted only a package of at least $550 billion would "make sure that the economy grows." 
"Why are they for a little-bitty tax relief package?" he said of senators who opposed his bid for larger cuts. 
Anticipating the questions, the White House compiled numbers showing that the final version, while smaller overall, offers bigger relief in its first two years. Mr. Bush's original proposal for $726 billion in tax reductions through 2013 included $191 billion in cuts the first two years, compared with $226 billion in the final bill..."
Compassiongate: President Bush clearly criticized the total size of the tax package (indicating it had better be higher than $550 billion, and not the immediate tax reductions for 2003 and 2004 - so the explanation for his "change of heart" is at best compassionate).

Dana Milbank and Jim VandeHei (Washington Post):
"...In brokering and celebrating a $350 billion tax-and-spending package he derided less than a month earlier, President Bush and top aides this week made the calculation that it was more important to have a tax cut than to stand on principle over its size and content...
it was a different Bush who appeared in the Capitol yesterday to congratulate lawmakers for reaching agreement on a $350 billion plan with $318 billion of tax cuts over 10 years. "I look forward to signing the economic recovery bill soon," he said. "This bill I'm going to sign is good for American workers, it is good for American families, it is good for American investors and it's good for American entrepreneurs and small-business owners." 
How did Bush go from dismissing a tax cut of this magnitude to hailing it? Bush and his aides, realizing that Republican lawmakers who control both chambers of Congress were in danger of leaving for the Memorial Day recess without a tax agreement, made clear that the president would accept any deal. 
"Politically, it was essential," a Senate GOP aide said. "The president and the Republicans couldn't go into Memorial Day with nothing to show on the economy."

"...Asked a week ago about McCain's plan to postpone tax cuts until after the war, Fleischer replied that tax cuts would ensure that, "when the war is over, our military has jobs to come home to."..."

Also see: Dana Milbank (Washington Post)

Making various claims about not knowing the costs

said "...The nation needs quick action by our Congress on a pro-growth economic package.  We need tax relief totaling at least $550 billion to make sure our economy grows.  And American workers and American businesses need every bit of that relief now…” “And a significant part of the benefit [from the tax cut package] to our economy will come within the first two years of the plan.” “…economic and job growth will come when consumers buy more goods and services from businesses such as your own.  And the best and fairest way to make sure Americans can do that is to grant them immediate tax relief so they have more of their own money to spend or save.”..."

..."

has repeatedly pushed the view that tax cuts will create more jobs and boost the economy. For example he said recently - "...I believe we should enact more tax relief, so that we can create more jobs and more Americans can find work and provide for their families..."

In 2003
Paul Krugman (New York Times):
"...In fact, those who oppose the Bush plan think it will work no better than the 2001 tax cut: that it will do little for growth or employment, and will sharply raise the deficit. (These guys now have a track record, and it's not encouraging. In the year and a half since that tax cut, which was sold as the perfect economic stimulus, the economy has lost 1.4 million jobs.)..."

Washington Post:
"...Thus, it's not surprising that Mr. Bush is casting his tax cut as a job creation vehicle. The dismal new unemployment numbers, Mr. Bush said, "should say loud and clear . . . we need robust tax relief so our fellow citizens can find a job." One response to that battle cry is that the most disputed piece of Mr. Bush's tax cut -- dividend tax relief -- is apt to do the least in creating jobs in the short term and that most of the president's proposed tax cuts would occur after 2004, by which point the economy should have recovered...
A study by the financial research group Economy.com put unemployment spending at the top of the list of stimulative measures, estimating that each dollar spent on the program would boost the economy by $1.73; by contrast, reducing the taxation of dividends would return just 9 cents on the dollar, the study found. An argument against extending benefits is that it would reduce incentives for the unemployed to find work. But as Federal Reserve Board Chairman Alan Greenspan told Congress, when jobs are evaporating, the limits "almost surely ought to be eased to recognize the fact that people are unemployed because they couldn't get a job, not because they don't feel like working." Mr. Greenspan made his remarks in November. Since then, the economy has lost nearly half a million jobs..."

Also see: Jared Bernstein (EPI) for more on the continuing jobless recovery since the 2001 tax cuts 

"..."Some members of Congress support tax relief but say my proposal is too big," Bush said in his Saturday radio address. "Since they already agree that tax relief creates jobs, it doesn't make sense to provide less tax relief and, therefore, create fewer jobs."..."

Liberal Oasis:
George Voinovich (Sen -OH): "...when we voted for the last tax reduction--and I was a leader in supporting that in 2001--we had a $5.6 trillion surplus. Today it's projected in the next 10 years that we're going to have a $2 trillion deficit, and we're going to be borrowing this year…I know that a lot of people can't believe this number--but we're going to borrow over $500 billion this year and next year to run our government...recently the economists from Goldman Sachs told The New York Times that the percentage of our debt to our gross domestic product is moving from about 33 percent to 49 percent…and they believe that will undermine our economy instead of stimulating it..."

"...In his Canton speech, the President also blamed Congress for phasing in the tax-rate reductions, estate tax repeal, and other aspects of the 2001 tax cut that he signed into law...“And Congress responded, but the problem is they responded with a phased-in program.  They said tax relief was important and tax relief should be robust, but they phased it in over a number of years - three years in some cases, five years in others, and seven years. Listen, all I’m asking Congress to do is to take the tax relief package they’ve already passed, accelerate it to this year so that we can get this economy started and people can find work..."

Jonathan Chait (The New Republic):
"...He makes it sound like an unwelcome scheme, probably cooked up by Tom Daschle. In fact, Bush's original 2001 plan had phase-ins, and Congress--with the administration's approval--extended the phase-ins in order to include the deepest possible tax cuts while still appearing to comply with its budget. Each tax cut, in other words, is mined with time bombs that must be defused (or else we'll have a "tax increase"), and each fix plants new ones that must be defused again. Bush will soon be back decrying those very gimmicks and demanding they be fixed by yet another tax cut..."

"...Mr. Bush suggests on the stump that his 2001 tax cuts were limited to nine years as a result of a “quirk in the rules in the United States Senate.”..."

said that a $550 billion tax cut would create more than 1 million jobs by the end of 2004, compared with the 1.4 million jobs he contends would be created by the original $726 billion version. "That's not my projection," he said. "That's the projection of a lot of smart economists who have analyzed the package."

Brendan Nyhan (Spinsanity):
"...the CEA also briefly states that, "On average over end-2002 to end-2007, job creation as a result of the package would be 140,000 higher than otherwise." In other words, over this five year period, a net total of 700,000 additional new jobs would be created as a result of the proposal, not 1.4 million. Thus, according to CEA, the President's plan would create 1.4 million additional new jobs in the first two years, but would also lead to 700,000 fewer jobs being created in 2005-2007 than would have been created without the passage of a tax cut, leading to a net job creation total as a result of the package of 700,000 (140,000 per year for five years). This remarkable finding, which is obscured by the CEA in its analysis, has received scant national media coverage besides a CNN/Money story...."

MaxSpeak:
"...The average over the next five years provided by the CEA is 140,000. This means the five year total is only 700,000. Hence the jobs effect of the President's proposal, according to his own CEA, is a reduction of jobs from years 2005 through 2007. Hence as a public service, through the use of advanced mathematics, MaxSpeak has supplied the missing columns to this table. The difference between 1.4 million and the five year total of 700,000 averages out to job losses (the parentheses in the table indicate negative numbers) for years 2005-2007, if one measures from 4th Quarter to 4th Quarter. (The second row provides the same calculations in terms of the year over year averages.)..."

Jonathan Weisman (Washington Post):
"...Beyond 2007, the tax package would actually do more harm than good, warned Joel Prakken of Macroeconomic Advisers LLC, which developed the computer model the White House used...in the longer run, surging budget deficits would raise interest rates and lower savings rates, while higher investment income would actually discourage job creation, Prakken said..."

Washington Post:
"...Well, the Joint Committee on Taxation has produced...an assessment of the economic effects of the House's $550 billion tax cut, which the administration says it "strongly supports"... The joint tax committee quietly slipped its analysis into the Congressional Record on Friday, just as the House was preparing to pass the tax cut. To look at the study is to understand the reasons for this stealth release.
The committee, like the CBO, used dynamic scoring, predicting the tax cut's effect on the economy and taking that into account when measuring revenue impact. And, as Mr. Snow hoped, it considered the effect of tax cuts without changes on the spending side...
Will the tax cut create jobs? In the first five years, somewhere between 230,000 (according to three of the models) and 900,000 jobs would be created. To put this in perspective, the economy has lost 500,000 jobs in the past three months alone. In the second five years, the study predicts no new job creation (one model) or actual job losses..."

"...has also repeatedly claimed that, as he put it in his May 6 speech, that "[t]he right answer for how big the tax cut ought to be is a million jobs. That's the right answer. And that's the package I submitted to the United States Congress." Stephen Fisher, Director of the National Economic Council, made an identical claim in an online chat: "The Council of Economic Advisers projects that the President's [original] proposal would create 1.4 million jobs by the end of 2004. Congress is looking at a smaller proposal, which would create a million new jobs by the end of 2004."..."

said "...we will not deny, we will not ignore, we will not pass along our problems to other Congresses, other presidents, and other generations..."

"...250 Economists Endorse President Bush's Jobs and Growth Plan..."