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..."

(just being very very compassionate here)

Expressing pleasure at the 

"$550 billion" House and "$350 billion" Senate tax bills

and the final "$350 billion" tax cut that passed in both houses

Paul Krugman (New York Times):
"...in 2001, as now, some swing senators insisted on a budget resolution limiting the size of any tax cut. No problem. House-Senate negotiators pushed through a huge tax cut anyway, "saving" several hundred billion dollars by making the whole thing expire in the 10th year. Among other things, this "sunset clause" implied that heirs to large estates would pay no tax if their parents died in 2010, but would face significant taxes if their parents made it into 2011. At the time I suggested that it be renamed the Throw Momma from the Train Act of 2001. 
Needless to say, the bill was silly by design. The administration didn't intend to compromise: it fully expected to get the sunset clause repealed in a future Congress. And President Bush was soon out there ridiculing the way the tax cut was programmed to expire, implying that the expiration date was imposed by scheming liberals, when in fact it was a trick perpetrated by his own Congressional allies. 
Now Congress is voting on more tax cuts. This time we're already running a record budget deficit, and the long-run prospect is bleak. Still, the administration claims to be making a concession by agreeing to scale back its $726 billion tax cut to a mere $550 billion. 
So how does the House bill, which is broadly similar to the administration's proposal, stay within that $550 billion limit? Sunset clauses! Many of the provisions would supposedly expire in 2005, others in 2012. Otherwise, it's a bigger tax cut than the administration proposed. And the sunset clauses, like those in the 2001 tax cut, are clearly a mere gimmick: as soon as a tax cut becomes law, the administration will begin demanding that the whole thing be made permanent. 
The Center on Budget and Policy Priorities estimates that the true cost of the House bill, without the sunset scam, would be $1.1 trillion over the next decade. You know, $550 billion here, $550 billion there, and pretty soon you're talking real money. 
The new tax cut plan echoes the 2001 scam in other ways. In 2001 a tax cut that delivered about 40 percent of its benefits to the richest 1 percent of families was marketed as a tax break for ordinary folks. The same is true this time. In fact, the extent to which the House bill favors the rich is breathtaking: the typical family would get a tax break of only $217 next year, but families with incomes above $1 million would get an average of $93,500 each. The center estimates that over the next decade, 27 percent of the tax cut — about the share that goes to the bottom 90 percent of the population — would go to these very high-income families, who comprise a mere 0.13 percent of the population..."

Robert Greenstein, Richard Kogan and Joel Friedman (CBPP):
"...The tax-cut package the President will sign into law May 28 carries an “official” cost of $350 billion through 2013, but does so only through the massive use of budget gimmicks.  Every provision in the bill but one expires between the end of 2004 and the end of 2008, and most or all of these provisions are nearly certain to be extended.  If the provisions are extended, the cost of the legislation through 2013 will be $807 billion to $1.06 trillion.[1]...The legislation’s ultimate cost thus is likely to surpass the $726 billion cost of the Administration’s plan.[2]...
House Speaker Dennis Hastert apparently agrees with an estimate of this size.  The Speaker stated on May 22:  “The $350 [billion] number takes us through the next two years, basically.  But also it could end up being a trillion-dollar bill, because this stuff is extendable.”[4]..."

Compassiongate: If you have no time to read more than one article, read the one above in full.

Jonathan Chait (The New Republic):
"...The 2001 tax cut, for instance, delayed implementation of many tax cuts and ended others abruptly. This year, Senate Republicans again made full use of such gimmickry, passing a "$350 billion" tax cut that, realistically accounted for, would drain perhaps as much as $1 trillion from federal coffers during the next ten years. Unsurprisingly, arch-conservative Tom DeLay gladly acceded to the "$350 billion" ceiling, explaining to The New York Times, "Numbers don't mean anything."..."

CBS News:
"...Republican leaders are already indicating they want to extend the bill's many temporary tax cuts. Sen. Olympia Snowe, R-Maine, one of the moderates who forced Congress to halve the president's tax cut plan, said the bill still worried her. "This is a trillion-dollar tax cut masquerading as $350 billion," she said. "This tax cut may grow deficits to levels economists fear will be unsustainable."

(being compassionate)

(responding to criticism that the tax cut "prevents low-income Americans from receiving the increased child credit granted to wealthier families under the new law")

"...said the exclusion of these low-income families from the child credit is "not anything new" and was part of the Senate's original version of the tax bill...When pressed by reporters about the president's support for excluding lower income families from the provision, Fleischer said the president "didn't get everything he wanted" in the $350 billion tax cut bill..."

Isaac Shapiro and Robert Greenstein (CBPP):
"...The tax bill that President Bush signed May 28 dropped a child tax credit provision included in the Senate version of the bill that would have assisted close to 12 million children in low-income working families, many of whom receive no benefit from the final legislation...In explaining why this provision was dropped, a spokeswoman for the House Ways and Means Committee told the New York Times that the provision was in the bill when the cost of the package was tentatively set at $380 billion but was one of the provisions that had to be dropped to reduce the bill’s cost to $350 billion.  Since the cost of the dropped provision was only $3.5 billion, it appears this decision was not necessary...

• The cost of the deleted low-income child tax credit provision - $3.5 billion - equals one percent of the official cost of the final bill.  It equals just 2.3 percent of the official cost of the capital gains/dividend tax cut and thus could have been included if the capital gains/dividend provision had been scaled back slightly.

• Alternatively, room could have been made for the child credit provision by slightly reducing the acceleration in the reduction in the top income tax rate.  The Urban Institute-Brookings Institution Tax Policy Center estimates that for each 0.1 percentage point the top rate is reduced, the cost is $1.3 billion.  Thus, if the top rate had been reduced to 35.3 percent in 2003 through 2005 (and 35 percent thereafter) rather than to 35.0 percent now, the savings would have been $3.9 billion, which would have been more than enough to pay for the low-income child tax credit provision...

• A third way that room could have been made for the child credit provision was by including in the legislation some measures to close abusive corporate tax shelters.  As The Washington Post has reported, the Senate Bill “included provision to crack down on abusive corporate tax shelters, combat some accounting scams such as those pursued by Enron Corp., prevent U.S. companies from moving their headquarters to post office boxes in offshore tax havens such as Bermuda and limit grossly inflated deferred compensation plans for corporate executives.”[2]  These Senate provisions would have saved more than $25 billion.   All of these provisions were dropped in conference...

• The cost of the deleted child credit provision is dwarfed by the tax cuts the bill provides to people whose incomes above $1 million.  The legislation will provide in the neighborhood of $90 billion in tax cuts to the approximately 200,000 households with incomes over $1 million if none of the provisions in the legislation are extended, and larger amounts if, as now seems likely, a number of the provisions are renewed.  By contrast, there are 11.9 million children in low-income working families that would have benefited from the low-income tax child credit provision that was jettisoned in conference.

• The low-income child tax credit provision that was dropped was simply an acceleration of a change that will take effect in 2005.  Its costs thus would have been limited to this year and next.  This contrasts with many tax cut provisions included in the legislation that are likely to be extended and ultimately to cost much more than the official cost estimate for the legislation indicates. 

"...stated that 34 million families with children will receive an average tax cut in 2003 of $1,549..."

"...said that 12 million elderly tax filers will receive an average tax cut in 2003 of $1,401..."

"...repeated Treasury Department figures that 23 million small business owners and households with small business income will receive an average tax cut in 2003 of $2,209..."

"...Treasury release states that “91 million taxpayers will receive, on average, a tax cut of $1,126.”..."

• The average tax cut in 2003 for households in the middle of the income spectrum (i.e., the middle fifth of households) will be $217, or less than one-fifth the total advertised by the Administration.

• 83 percent of households will get less than the average amount cited by the Administration.

• Some 53 percent of U.S. households — or 74 million households — will receive a tax cut of $100 or less.  This includes 50 million households that will receive no tax cut whatsoever.

“And, of course, for people in the 10 percent bracket, they benefit the most from it, and that’s the lowest income workers in America.”  Fleisher went on to say “this certainly does deliver tax relief to the people who pay income taxes.”

Bush

"...My jobs and growth plan would reduce tax rates for everyone who pays income tax..."

* The 5 million single taxpayers in the 10 percent tax bracket who have no children and receive no dividend or capital gains income.[3]  Many single taxpayers are in this tax bracket... 

* Some 2.6 million taxpayers with “head-of-household” filing status.  Thirty-seven percent of all taxpayers with head-of-household filing status — about three in every eight — will receive no tax cut.  The head-of-household filing status is widely used by divorced and other single parents who are caring for children or other dependent relatives such as elderly or disabled parents.
Most of the “head-of-household” taxpayers who will receive no tax cut are taxpayers in the 10 percent or 15 percent tax brackets whose dependents are either children age 17 or over or older individuals such as elderly or disabled parents.[4]  (Children 17 and over do not qualify for the child tax credit.)  These head-of-household taxpayers who will not receive a tax cut have incomes of up to $50,000 or more.  Some of them pay $5,000 or more in income tax.
In fact, the Tax Policy Center data show that 41 percent of all head-of-household taxpayers in the nation who pay between $1,000 and $5,000 in income tax will receive no tax cut under the new law. The Tax Policy Center data also indicate that 500,000 other filers who pay income tax will receive no tax cut.  This group includes taxpayers from several categories, such as nearly 400,000 married taxpayers, most of whom are in the 10 percent bracket, do not have children under 17, and itemize their deductions (and thus do not benefit from the legislation’s increase in the standard deduction for married taxpayers)..."

"...said the president would have signed a tax-cut bill that did extend the credit. But he said negotiators had faced a decision of giving taxpayers a break or giving more money to those who pay no taxes, and had chosen the former. "Does tax relief go to people who pay income taxes and forgive their income taxes, or does it go above and beyond the forgiving of all income taxes, and you actually get a check back from the government for more than you ever owed in income taxes?" Mr. Fleischer said. "And this is part and parcel of the debate over tax relief. This certainly does deliver tax relief to the people who pay income taxes."..."

"...The seven-page analysis, by the Treasury Department's Office of Tax Analysis, asserts that repealing the tax cuts enacted in 2001 and last month would mean a tax hike of $1,933 for a married couple with two children and an income of $40,000. Their taxes would go from $45 to $1,978, for an increase of 4,296 percent, the study said.
"If you are advocating repealing the 2001 and 2003 tax cuts, you are advocating a significant tax increase on the American people," said Rob Nichols, the Treasury Department's chief spokesman. "You're talking about raising taxes on roughly 100 million households."..."

"...Congress has passed tax cuts in each of the last three years, but has not approved all the tax cutting measured proposed by the president. White House budget director Joshua B. Bolten, in a meeting Friday with Washington Post editors and reporters, said the administration will continue to push those proposals for another $796 billion in tax cuts over the next decade...He strongly defended the tax cuts that remain on the president's agenda as "the right policies." They include extending existing tax cuts that are scheduled to expire while offering new tax credits for health insurance and charitable giving, housing development, energy exploration, business research and development, and new savings accounts that would render income from investments tax-free for virtually all Americans. Those tax cuts will help put the economy on a stronger footing, which will help bring down the deficit, he said. "I don't see the president's tax cutting agenda as entirely dissociated or even in conflict with bringing the budget situation well under control," Bolten said..."

"...It's fair to tax a company's profits. It is not fair to again tax the shareholder on the same profits...ask you to end the unfair double taxation of dividends..."

"...It's unfair to tax money twice," he said as he unveiled his economic-stimulus plan earlier this month. "There's a principle involved. The government ought to be content with taxing revenue streams or profits one time, not twice."..."

Dean Baker (CEPR) via IPA:
"...Proponents of a tax preference for dividend income have pushed the notion that the taxation of dividend income amounts to double taxation. The basis for this claim is that corporate profits are subject to the corporate income tax. Since dividends are paid out of profits, the argument is that the personal income tax paid on dividend income amounts to a second tax on corporate profits. This logic is dubious for two reasons. First, there is a legal and logical distinction between the corporation as an entity and the individual shareholders who own the firm. Second, the tax rates currently in place were set with the knowledge that there was both a corporate and individual income tax. This means that if there is a moral objection to “double taxation” then the appropriate remedy would also require an increase in the corporate income tax...
The corporation is subject to taxation in exchange for the privileges granted to it by the government. The shareholders are subject to tax on their dividend income, just as workers are subject to tax on wage income. The same income—that is, income to the same people or entity—is not being taxed twice..."

Daniel Altman (New York Times):
"...Corporate dividends, however, are not the only kind of income that is taxed twice. Other taxes create a double, triple or even quintuple burden. And unlike the double taxation of dividends, which mainly affects the wealthy, the burden of other forms of multiple taxation — sales taxes, import taxes, payroll taxes, among others — often falls most heavily on poorer Americans..."

(such extraordinary moral clarity and compassion!)

"..."There's just a simple fairness issue on the double taxation of dividends," Bush told a New Mexico audience last week. "Listen, we should be taxing corporate profits, and we do. But, in this country, not only do we tax corporate profits; when part of those profits are distributed to the owners of the companies, small and large alike, it gets taxed again."..."

"...The President declared that “the minute I got sworn in, we were in a recession.  And that’s why I went to Congress for a tax package.”..."  

"...President Bush opened his final radio address of the year this way:  "In 2002, our economy was still  recovering from the attacks of September the 11^th, 2001, and  it was pulling out of a recession that  began before I took office."..."

Bush

"..."Two-and-a-half years ago, we inherited an economy in recession," he told donors at a Bush-Cheney '04 reception yesterday in Miami. He has raised the same accusation in fundraising appearances since mid-June in Washington, Georgia, New York, Los Angeles and San Francisco..."

Richard Kogan (CBPP):
"...

• The President declared that “the minute I got sworn in, we were in a recession.  And that’s why I went to Congress for a tax package.”  The first sentence is not accurate.  The recession dates from March 2001; both the economy and the number of jobs continued to grow through March.  (The number of jobs has shrunk steadily since then.)  Moreover, the President’s own economic advisers — and the budgets he presented to the nation in February and April 2001 that contained his tax cut — projected continued healthy economic growth: 2.4 percent for 2001 and 3.3 percent for 2002, for example.[3] 

• How about the President’s claim that he requested his tax cut because of the (pending) recession?  The tax-cut package the President requested early in 2001 was virtually identical to the tax package he had campaigned on for more than a year, during boom times.  It strains credulity to believe that the tax package he first unveiled in 1999 when he was facing Steve Forbes and John McCain in the Presidential primaries was designed to respond to a recession that started in March 2001..."

"...Bush and others have implied that  the tax cut will actually increase  revenues for the federal government  over the long term..."

"...Bush...on January 7...claimed his tax cut proposals "are essential for the long run... to lay the groundwork for future growth and future prosperity. That growth will bring the added benefit of higher revenues for the government -- revenues that will keep tax rates low..." Cheney made the same claim in a January 30 speech promoting the President's tax cut...And Press Secretary Ari Fleischer was the most direct during a January 8 press briefing: "The entire package the President does believe will lead to growth, which will over time grow the economy, create additional revenues for the federal government and pay for itself."..."

Brendan Nyhan (Spinsanity):
"...Mankiw, Bush's nominee for chairman of CEA...said Moore was criticizing "a passage where I had raised skepticism about claims that tax cuts would generate so much employment growth as to be completely self-financing. And I remain skeptical of those claims." Mankiw added that "the most extreme advocates of tax cuts, I think, sometimes paint an excessively rosy picture out of what they can get out of them...
As we previously pointed out, the CEA's 2003 Economic Report of the President also casts doubt on these claims [2.7 MB PDF]: The modest effect of government debt on interest rates does not mean that tax cuts pay for themselves with higher output. Although the economy grows in response to tax reductions (because of higher consumption in the short run and improved incentives in the long run), it is unlikely to grow so much that lost tax revenue is completely recovered by the higher level of economic activity. "

Brad DeLong:
"...Alan Murray reports on the Congressional Budget Office's analysis of the effect of the Bush budget proposals on economic growth and on tax collections:
WSJ.com - Political Capital: ...The results: Some provisions of the president's plan would speed up the economy; others would slow it down. Using some models, the plan would reduce the budget deficit from what it otherwise would have been; using others, it would widen the deficit. But in every case, the effects are relatively small. And in no case does Mr. Bush's tax cut come close to paying for itself over the next 10 years. For the handful of people who read the report in its entirety, there is another surprise. Of the nine different economic models used to analyze the president's plan, only two showed a large improvement in the deficit over the next decade as a result of "supply side" effects. Both those models got their results by assuming that after 2013, taxes would be raised to eliminate the remaining deficit (CG emphasis). The theory is that people will work harder between 2004 and 2013 because they know that their taxes will be going up, and will want to earn more money before those tax increases take effect. Using those same models, if the assumption is changed so that government spending falls after 2013 to close the deficit -- the outcome preferred by most supply-siders -- the economic benefits disappear. The president's plan would cause the deficit to become slightly wider over the next 10 years than it would have been otherwise. 
What Alan Murray doesn't say--but should--is that the further out you look, the worse the effects of the proposals are..."

Washington Post (Editorial):
"...FOR YEARS, tax-cut aficionados have argued that the green-eyeshade crowd underestimates the benefits of tax cuts by measuring only the costs. They say the nonpartisan Congressional Budget Office should include in its analyses extra revenue that would be generated by economic growth stimulated by, yes, the tax cuts. Now the CBO has tried it their way -- and the administration's contention that the country will magically "grow its way" out of deficits as it cuts taxes still turns out to be more or less a fairy tale. The CBO, headed by new director Douglas Holtz-Eakin, who arrived straight from the White House Council of Economic Advisers, analyzed President Bush's tax and spending proposals using various models to forecast the overall effect on the economy. The report -- the CBO's first foray into dynamic analysis -- showed "small" supply-side effects, "either positive or negative," from Mr. Bush's budget. Its models indicated that the proposals would raise -- or, in most scenarios, lower -- economic growth by less than a percentage point on average in the next 10 years. This is significant, because the administration has suggested that the tax package would pay for itself, at least in part, by spurring productivity...A few weeks back, using its conventional approach, the CBO projected that the president's budget would add $2.7 trillion to the deficit through 2013. Now it has offered seven dynamic scenarios, and four showed deficits even bigger than that -- as high as $3 trillion under one approach. Three others showed smaller deficits, but the smallest was $2.3 trillion, and those models all assumed that taxes would have to be raised permanently in 2014 by more than $200 billion in order to finance the preceding 10 years of higher deficits. As Rep. Chet Edwards (D-Tex.) put it, "This analysis is bad news for the free lunch philosophy." Rep. Gil Gutknecht (R-Minn.), a proponent of dynamic scoring, pronounced himself "somewhat surprised and humbled that your model doesn't give us better news than we had hoped for."..."

William Raspberry (Washington Post):
"...Rank-and-file supporters of the tax cuts offer two main points: that tax cuts always increase revenue (witness cuts under Presidents Kennedy and Reagan) and that if you give the people some of their money back, they'll spend it or invest it, either of which will stimulate the economy.
If they believe this -- that it is the tax reduction itself, not the specific ways in which it is directed, that provides its revenue-enhancing power -- aren't they logically bound to keep cutting taxes, even to zero? Do they really believe that a stock market, stalled by the fact that there is so much investable money "sitting on the sidelines," will be stimulated by giving more money to those on the sidelines? And if they believe, as many of them claim, that Washington bureaucrats would only waste the money if we didn't cut taxes, won't the increase in revenue the tax cut is supposed to trigger give the bureaucrats more money to waste?
Many of those who argue for this tax cut on the ground that it will increase government revenue were, in the first year of the Bush administration, arguing for tax cuts because of the record revenue surplus. If the government has too much, cut taxes. If it has too little, cut taxes..."

(being very compassionate)

"...[A] recent Congressional Budget Office study that used the Republican-favored method of "dynamic scoring"...found that the administration's tax and spending proposals would have, at best, a negligible effect on the economy. "...I wish they had scored the tax cuts alone, because if they had scored the tax cuts alone, I think they would have had a different conclusion..."

"...January 2001: The White House economic adviser Lawrence Lindsey argues that George W. Bush's tax cut — not interest rate cuts — is the right solution to the economic slowdown, because the tax cut has a "much bigger heft."..."

"...chief economic adviser, Lawrence Lindsey...said: "Let's contrast the typical credit card borrower on monetary policy versus fiscal policy. The interest rate cut of last week helps the typical credit card borrower about two bucks a month, two dollars a month, whereas Mr. Bush's tax cut for a family making $40,000, gets a $1,600-a-year tax cut, 32 bucks a week. That's a much bigger heft."..."

  Paul Krugman (New York Times):
"...Nowadays Mr. [Milton] Friedman is mainly famous as an apostle of free markets. But through much of his career he was best known as the champion of the conservative doctrine known as monetarism. Basically, monetarists wanted to get the government out of the business of short-term economic management. First and foremost this meant rejecting the use of fiscal policy — discretionary tax cuts or spending increases — to fight recessions. By and large this was an argument that the monetarists won on the evidence. Few economists now accept Mr. Friedman's further view that even monetary policy should be placed on cruise control. Alas, it turns out that a stable money supply is no guarantee of a stable economy. But almost all economists now agree with the position that monetary policy, not fiscal policy, is the tool of choice for fighting recessions...
You have to admire Mr. Lindsey. It's not often that an economist manages a triple play. But he did it: his statement was specious on three distinct levels. First, he exaggerated the impact of Mr. Bush's proposed tax cut on ordinary families. Most families would get far less than he suggested; independent estimates indicate that on average even families with an income of $50,000 would get only half as much tax relief.  
Second, he loaded the comparison by comparing the full impact of tax cuts with only one minor effect of interest rate reductions. Won't lower rates (which can, incidentally, be reduced much further) also reduce mortgage payments — not to mention the burden of debt on corporations?
Finally, and most important, he misrepresented the way interest rate cuts work. Their main effect on demand isn't via a reduction in the payments people make on the debt they already have; lower interest rates work by stimulating investment, that is, by inducing businesses and individuals to borrow more, or to put their money into real assets instead of parking it in bonds. That's how rate cuts led to recovery from the last recession even while Bill Clinton was raising taxes. It was a remarkable display of bogus economic analysis..."

"..."[T]his year many of our states are facing serious fiscal challenges—problems born out of rapid expansion of government spending in the 1990s, tax hikes that limited economic growth [italics Chatterbox's] and a decline in the financial markets. …"

"...Very high personal taxes were clearly one factor that helped choke off the expansion. While personal taxes on average took only 12 percent of personal income in 1993, they consumed almost 24 percent of the growth in personal income between 1999 and 2000..."

"...I call upon the leadership on both sides of the aisle not to fall prey to a false set of economic assumptions that say if you raise taxes it'll help the economy. It will hurt the economy..."

"...appearing before the National Governors Association on Feb. 24, said his 2004 budget proposes $400 billion in grants to the states, and "that's a 9 percent increase." He pointed out that "that's a bigger increase than 4 percent," which is the growth he proposed for overall spending..."

claiming that his imposing tariffs on imported steel was a matter of upholding the law

"..."[Mr Bush] reiterated the American position, which [was that] the American government already cleared the merger so, of course, the president said that," White House spokesman Ari Fleischer said. Mr Bush had merely "reiterated the American position", Mr Fleischer said..."

claiming that his tax cut plan would create 2.1 million jobs over three years

GOV. BUSH: [T]here is a difference, though, as to what the economy has meant. I think the economy has meant more for the Gore and Clinton folks than the Gore and Clinton folks have meant for the economy. I think most of the economic growth that has taken place is the result of ingenuity and hard work and entrepreneurship…

President Bush announced his alleged economic stimulus package today. At the very end of the Washington Post article on the announcement we noticed the following:

Overall, Bush's Council of Economic Advisers said the president's plan would create 2.1 million jobs over three years, the White House said.

What? Government policy and not the hard working entrepreneurs create jobs? Now surely the right wing pundits will not allow that claim to stand. The Wall Street Journal editorial page will denounce such blasphemy in the strongest possible terms. Rush will explain how the Bush administration does not understand basic economics. The Fox News All Stars will opine that it just goes to show that the Bush administration is delusional and will do anything to win. Howard Fineman will note that the apostasy is explained by the fact that Bush was wearing a red tie and a dark suit when the statement was issued. We are just sure of it..."