Rudy Giuliani rolled out his "Twelve Commitments" on Tuesday. One promise will no doubt thrill the GOP base: "I will cut taxes and reform the tax code." It's tax cuts, baby! Tax cuts! How Rudy plans to reform the tax code, he didn't explain. However, Rudy's "commitment" to tax cuts behooves a look at his campaign rhetoric and his mayoral performance. Joe Conason, a long-time Salon columnist, journalist, and author, examined his record and reported Rudy's Scary Tax Tales:
...the war in Iraq is increasingly unpopular, so lately Mr. Giuliani is talking more about supply-side economics—and about Hillary Rodham Clinton, who irritates Republicans almost as much as taxes. During a campaign visit to California’s Silicon Valley on May 30, he resorted to familiar right-wing rhetoric in attacking his old rival.
What prompted Mr. Giuliani to pounce was Senator Clinton’s forthright declaration that she would, if elected, roll back some of the Bush administration’s tax cuts for the richest Americans. “This would be an astounding, staggering tax increase,” he said at a fund-raiser that included technology executives and lobbyists. “She wants to go back to the 1990’s …. It would hurt our economy. It would hurt this area dramatically. That kind of tax increase would see a decline in your venture capital. It would see a decline in your ability to focus on new technology.”OK, America. Show of hands of who would like to return to the prosperity garnered under the Clinton economy? Yeah, me too. As Conason pointed out:
Once again, Mr. Giuliani’s memory seems to be failing him, as it did when he claimed that Ronald Reagan had stared down the Iranian mullahs (rather than secretly selling them missiles and giving them cakes). His Mayoralty, which lasted from 1994 until 2001, closely coincided with the strongest decade of economic growth in American history. He should remember those fat times, because the city advanced smartly along with the rest of the nation.
In fact, if he tries hard enough, he might even recall that those years of peace and prosperity began with a bitter debate over taxes, when President Clinton was seeking to enact his first federal budget. Upon entering the Oval Office, Mr. Clinton found to his dismayed surprise that his “fiscally conservative” predecessor had left a $290 billion deficit. He responded by imposing substantial tax increases on the top 1 percent of taxpayers and omitting the “middle-class tax cut” he had promised in his campaign.
Predictably, the Republican right threw a screaming tantrum, falsely describing the tax increase as the “largest in history” (that honor actually belonged to Reagan) and warning that it would result in a severe recession or worse. Conservative politicians and pundits unanimously predicted that higher taxes would mean fewer jobs and larger deficits.
They were resoundingly wrong, of course. Within a few years after the ’93 tax hike, we were enjoying full employment, shrinking poverty, rising household incomes at all levels, greater home ownership—and the prospect of a gigantic federal surplus.
Now it is true that the biggest opportunities for Mr. Giuliani to enrich himself (and start worrying about the top tax rate) arrived in the years after he left office. As a security consultant, book author, investment rainmaker and corporate lawyer, he has reportedly earned many millions of dollars. He commands more than $50,000 for every inspiring speech he delivers about the leadership he displayed on 9/11—a fact that annoys firefighters and other heroes whose opinion of him has soured.
But for the rest of America, the 90’s were better than the years since the millennium. Under George W. Bush, another economic Reaganite who cut taxes for the wealthy, wages have stagnated along with family incomes, while the income gap has grown—all thanks to the kind of policies advocated by Mr. Giuliani. He promoted those trends early on as Mayor, when privatization began to drive down wages among the city’s lowest-paid workers, causing family incomes to drop and poverty to rise.
Out in Silicon Valley, he bragged about his economic record in office. “The way I paid for preparing the New York City budget was by lowering taxes. I was collecting billions of dollars more from the lower taxes than from the higher taxes,” he claimed. “You can make money by lowering taxes.”Indeed, under Repub governance, the richest Americans certainly have made more money... but people below the top 1%? Not so much. The idea that tax cuts generate more revenue hails from old Republican propaganda that's a tax-cut con. Yet those two words, tax cuts, warm the cockles of the hearts of the rubes who fall for the GOP talking point. Hey, it's magic. Slashing taxes increases revenue, right? Not exactly according to Paul Krugman. Early on, the Center on Budget and Policy Priorities evaluated Bush's tax cuts: "The three rounds of tax-cut legislation (in 2001, 2002, and 2003) account for a substantial share of the nation’s current deficit." And, our current situation in Washington involves "budget chicanery" although the Bush Administration has managed to hide it.
Joe also uncovered the net result of Rudy's tax cuts and the news should alert voters interested in a return to fiscal sanity:
He forgot to mention what happened later.... When he departed City Hall, he left on his desk a gaping deficit of nearly $4 billion—and Mayor Michael Bloomberg had no choice but to raise taxes.I don't see how much more debt the federal guvmit can stand after being soaked by the biggest gusher of red ink ever drilled by Bush. But I'm sure we will hear more from Rudy on how we "can make more money by lowering taxes."
Matt Miller of Fortune Magazine delivered a stinging assessment on Monday of Repub tax-cut policy overall:
New Census data show that the top 1 percent of U.S. earners now take home a greater share of national income than at any time since the height of the go-go 1920s. The top 300,000 earners together receive almost as much income as the bottom 150 million.
Democrats inhale these facts and breathe out fire.
Republicans say, "Hey, this is no time to be complacent. With a little effort we can push this closer to Louis XVI levels of inequality!"
At least that's what GOP presidential wannabes are sounding like as they genuflect before the altar of tax reduction, despite that creed's growing fiscal, moral, and mathematical indefensibility.
Mitt Romney wants more marginal and corporate rate cuts. Rudy Giuliani touts the endorsement of Steve "Flat Tax" Forbes. Even John McCain, the "straight talker" who opposed Bush's original tax cuts, now insists on their extension.
Before every red-blooded tax loather spits on this page in disgust, consider the context. Over the past six years we've borrowed nearly $2 trillion to cut taxes for the wealthiest during a time of war, meaning we've slipped the bill for our war and our tax cuts to our kids.
How do the candidates - who also claim to be "fiscally conservative" (not to mention devotees of "family values") - square all this?
Their stock answer is that we can cut taxes further if only we "get tough on spending." Sounds marvelous, but when Republicans controlled every corner of Washington, they balked at trimming a teensy few million from the next trillion in planned Medicaid expenses.
Bottom line: The outer limits of Republican spending-cut zeal won't get us anywhere close to balancing the books.
And that's before you toss in our $39 trillion in unfunded Social Security and Medicare liabilities.
I once asked budget gurus at two conservative think tanks what federal spending and taxes should be as a percentage of GDP a decade from now (it's 20 percent today). They casually replied 12 percent or 13 percent - meaning they think we'll slice government by more than a third as 77 million baby-boomers hit their rocking chairs.
This evidences either (a) deep disingenuousness or (b) deeper delusions.
Neither speaks well for the state of conservative thinking. Truth is, the only way GOP math adds up is if Giuliani, Romney, and company adopt the incentives for voluntary "transitions" (read suicides) for 65-year-olds featured in Chris Buckley's new comic novel, "Boomsday."
The most disappointing feature of the GOP case on taxes is a sin of omission. Tax-cut cheerleaders, like the Wall Street Journal editorial page, focus exclusively on the income tax. And it's true, the top 5 percent of earners do pay about 58 percent of federal income taxes.
But the income tax is only 47 percent of federal revenue today - something Republicans never want to discuss.
When you throw other federal taxes into the mix (especially the regressive payroll tax disproportionately borne by average earners), you find that "all in," the top-earning 5 percent make about 30 percent of the income and pay about 40 percent of overall federal taxes. In other words, we have a modestly progressive system.As conventional political wisdom goes and modern history has shown, Repubs favor the rich and Dems champion middle-class and poor Americans. We don't yet know the specs on who Rudy's tax cuts will benefit or how he will address the bloated U.S. deficit and income inequality in America. My bullshit meter went off when I read how the conservative anti-tax Club For Growth "praised Giuliani's tax cutting and free-market approach." Their white paper states that Rudy inherited a $2.4 billion budget deficit but conveniently doesn't mention the $4 billion debt he left for Mayor Bloomberg. And that's too similar to the scary situation Bush has created, the budget crisis the next president will face.
Hopefully, voters have gotten wise to the GOP tax-cut scam but let's make sure to tell them.
