David Sirota was the chief spokesman for the U.S. House Appropriations Committee Democrats at the time the budget and tax cuts mentioned in this article were enacted. He is completing a book entitled Hostile Takeover for Random House's Crown Publishers about the consequences of our government's economic policies.. This piece first appeared in the San Francisco Chronicle and is reprinted with permission.
As silence sets in over a Gulf Coast devastated by Hurricane Katrina, it is also setting in among both political parties in Washington. Sure, there is a lot of finger-pointing from Republicans at Louisiana state officials. And there is chest-thumping from Democrats about our government's slow response. But that is all pantomime compared to the silence on taxes—the real issue that is not only at the heart of the recent disaster, but at the heart of many of America's most pressing problems.
Our country spent the '90s building up a projected $5 trillion surplus as a rainy-day fund. But when it came time to prepare for the rainiest day of them all, the money we had socked away was, instead, used to pay for trillions of dollars of tax cuts—tax cuts that Americans have never wanted to supercede other pressing priorities. Here are the facts.
In 2001, Republicans passed a $1.3 trillion tax cut at the same time they pushed massive cuts to America's flood and hurricane protection programs. In 2003, President Bush pushed a $125 billion plan to eliminate taxes on stock dividends while cutting funds that his own Army Corps of Engineers said were needed to maintain flood-control infrastructure in southeast Louisiana. The next year, the White House pushed a $1 trillion plan to make the president's previous tax cuts permanent—the same year The New Orleans Times-Picayune reported that "for the first time in 37 years, federal budget cuts have all but stopped major work on the New Orleans area's east bank hurricane levees." Even this year, as the White House pushed to repeal the estate tax on the wealthiest 2 percent of Americans, it proposed a budget that would provide almost $300 million less than the Army Corps of Engineers said was needed to complete critical infrastructure improvements in and around New Orleans.
Remember, these tax and budget decisions happened while experts such as Bush's own Army Corps chief warned that leaving these infrastructure priorities unaddressed could lead to a disaster. Had most Americans heard these warnings, they most certainly would have supported rolling back Bush's tax cuts to make sure such urgent needs were addressed. Since 2001, polls have consistently shown Americans support reducing tax cuts in order to reduce the deficit and pay for critical priorities. Yet, knowing all of this, nobody today is talking taxes.
No political leaders are proposing rolling back tax cuts to pay Katrina's $51 billion clean-up bill, and perhaps worse, no one is even making the case that the disaster along the Gulf Coast was aided and abetted by tax-cut zealotry. Should we be surprised?
Hardly. Politicians have long been ignoring a debate over taxes, no matter how pressing the issue. Just look at recent crises. In 2002, our government faced serious revenue shortfalls right when we needed a big investment in homeland security. ABC News' national poll taken three months after the 9/11 terrorist attacks found a majority of Americans supported canceling the Bush tax cuts. But Congress refused, and instead opted to plunge America into record deficits, while underfunding critical Homeland Security priorities.
In 2003, it was the war in Iraq. As troops invaded Iraq in the spring, two national news organizations released polls showing that most Americans believed we could not afford more Bush tax cuts, and that Congress therefore should reject the president's proposal to eliminate taxes on stock dividends. Congress completely ignored the public. House Majority Leader Tom DeLay had already told reporters, "Nothing is more important in the face of a war than cutting taxes." The GOP then repealed the tax on dividends, added $200 billion in war spending to the deficit, and then pleaded poverty when it came to providing adequate body armor to U.S. troops in combat.
In 2004, it was America's jobs crisis. With unemployment up and wages down, a Money magazine poll showed three-quarters of Americans would rather the government invest in job creation programs than the Bush tax cuts. In response, the White House proposed big cuts to job training programs, while proposing to make the Bush tax cuts permanent. Now, in the aftermath of Katrina, America is at a crossroads. Will political leaders refuse to talk about eliminating the $336 billion in tax cuts the richest 1 percent of Americans are still slated to get over the next five years? Or will honest members of both parties finally say enough is enough?
President Bush has made clear where he stands: In his first interview after the catastrophe, he went out of his way to reiterate to ABC's Diane Sawyer that he will not re-evaluate his tax cuts. This, at the very moment thousands of people were hungry and drowning.
What about Sen. John McCain, R-Ariz.? Will he take up the end-the-tax-cut debate? Sorry, no. After Katrina, he told columnist Robert Novak he will help try to reduce or repeal the estate tax in the coming weeks.
That leaves the 2008 Democratic presidential contenders, who have yet to say anything about taxes. Incredibly, they believe the Katrina disaster will benefit them politically, even if they refuse to take any clear position showing how different tax and budget decisions might have made a difference. Such hollow posturing merely reinforces the perception that Democrats stand for nothing other than political opportunism. Only when one of them stands up and talks frankly about repealing the Bush tax cuts for the wealthy will America finally have the debate over priorities we so desperately need to have.