Girgenti: For the love of money

R. Colin Fly

Earlier this month, President Bush unveiled a flawed economic stimulus package worth $674 billion. It is primarily made up of a variety of tax cuts, including an end to the dividend tax and a decrease in the income tax. Many have charged that this tax cut would primarily benefit the topfive percent of income earners in America, a charge which Bush has not actually denied. In fact, one of Bush’s advisors said because 32 percent of Americans do not even pay the income tax, they obviously would not benefit from a decrease in the tax. However, this comment ignores the fact that the tax cuts still mean very little for the 63 percent of Americans who do pay the income tax and who are not among the richest five percent.

But more important is the question of the purpose of these tax cuts. Bush claims that they will help stimulate the economy by putting more money into people’s pockets so they can spend more. The fundamental error to this reasoning, however, is that the richest 5 percent of Americans already have so much money; that giving them more is not likely to significantly alter their spending patterns. The lowest rung of income earners in America would benefit greatly from an increase in the amount of money left in their pockets at the end of the day. These are the people who are lucky if they have enough money to pay rent and all their bills, and who have no disposable income to spend on movies, eating out or purchasing non-essential items. In order to stimulate the economy, money must be given to those who are likely to actually spend it instead of giving the money as a gift to Bush’s wealthy friends.

All that is necessary to improve the well-being of the most impoverished Americans is to guarantee all working Americans a living wage. A living wage is defined as enough for one wage earner in the household working full time to pay rent, bills and buy food. If there are two wage earners in the household working full time for a living wage, just imagine how much money they would have to buy things they do not necessarily need in order to strengthen the economy. Clearly, Bush is not so worried about the economy as he is about his wealthy friends.

Apparently I am not the only person who thinks the President’s tax-cut plan is flawed: a recent Washington Post-ABC News poll found that “a majority of Americans disapproved of President Bush’s handling of the economy for the first time in his presidency. The number of Americans who regard the economy as healthy has not been lower in the past nine years, and fewer than half supported the tax cut plan Bush has proposed as a remedy.”

More interestingly, this poll also found that “by more than 2-to-1, respondents said they would rather have more spending on education, health care and Social Security than a tax cut, and a sizable majority said they would rather the money be used to balance the federal budget.” Of course if like Bush, “you’re sick and tired of the politics of cynicism and polls and principles,” then you should be thrilled with his economic plans.