The Scum at the Top

Commentary on the Rats in Washington

‘Let Them Eat Cake’ Economics

By Jonathan Alter
Newsweek
page 36
© July 28, 2003

Bush is a regular guy who doesn’t care a whole lot about regular people. The first is a political asset. The second is his greatest vulnerability.

When Al Gore exaggerated the details of his dog’s prescriptions, it helped cost him the presidency. The very same people who eviscerated him for it are now saying, hey, cut President Bush some slack-he wasn’t lying about Saddam Hussein’s nuclear ambitions, only exaggerating. This flap won’t hurt Bush in 2004, except to undermine his credibility on other issues.

So when, for instance, he says "this nation has got a deficit because we have been through a war," people might begin to wonder whether he is telling the truth. They might wonder if the 13 percent state-college tuition hike in Maryland or the $1 billion state-tax increase in Ohio or the state Medicaid crisis now raging from coast to coast might have something to do with priorities in Washington. If Bush loses, it won’t be on yellowcake uranium but on "let them eat cake" economics.

Yes, the president acknowledges that the economic downturn might also have contributed something to the eye-popping $455 billion budget deficit announced last week, the largest ever. But God forbid he admits that his huge tax cuts are in any way relevant. That would risk saying something inconvenient and true. The nonpartisan Congressional Budget Office says that Bush’s tax cuts have cost the Treasury nearly three times as much as the wars in Afghanistan and Iraq, reconstruction after September 11 and homeland-security measures combined. Tax cuts = 9/11 + war x 3. And the numbers get much worse in the years ahead as baby boomers retire. In other words, even if the tax cuts help stimulate a modest recovery, we have dug ourselves a deep hole.

It’s a hole that the states - required by law to balance their budgets - are now being forced to fill. The tobacco-settlement money is gone; the "rainy day" funds exhausted. Under intense pressure from the governors, Washington ponied up $20 billion in emergency aid, but added tax breaks for corporations that will cost the states billions. The House just passed a plan for health savings accounts that will set the states back another $33 billion if enacted. And that’s not even counting the monster haunting every governor, every night - "unfunded mandates." To take just one example that is relevant in school districts across the country: special education. Congress pledged it would pay for 40 percent of the cost; it actually covers 17 percent. In California alone, where nearly half the budget goes to K-12 education, that’s more than a billion dollars the state has been stiffed on.

I’m no Gray Davis fan, but let’s be honest about the facts. While some states have been mismanaged, most are simply contending with rapidly growing numbers of hurting people who need their services. Those services are now being slashed almost everywhere. Nineteen states - all of them facing sharply increasing demand - will have smaller budgets than last year, not just smaller budget increases. But telling a laid-off mother with three kids that she can’t see a doctor will not be enough. Governors and state legislatures are taxing everything that moves. Even the most conservative states are doing so. Republican Gov. Bob Riley of Alabama, a devout Christian, says raising taxes on the wealthy to help the poor is what the Bible compels. He’s had enough of so-called religious politicians who turn Christ’s commandments on their head.

Explaining all this politically is a "bank shot," to use a billiards term. It requires trusting the voters with complexity. Will they see that their new $400 child credits are chump change compared with all the new fee hikes and service cuts? Will they understand that they’re paying more in state and local taxes so that a guy with a Jaguar putting up a McMansion down the block can pay less in federal taxes? Will they connect those 30 kids cramming their child’s classroom to decisions in faraway Washington?

It’s hard to tell, but the Democrats better try to develop that connective tissue. The reason I have not yet written off John Edwards is that he is quietly devoting his campaign to this theme. In New Hampshire last week, he raised Bush’s unfunded mandates in education: "The result is that your property taxes have to be raised, and that’s a huge mistake."

President Bush is a regular guy who doesn’t care a whole lot about regular people. The first is a political asset; voters like his guyness. The second is his greatest vulnerability, and he offers more evidence for it almost every day. Remember how he promised last winter to get rid of a loophole that allows U.S. companies with homeland-security contracts to unpatriotically incorporate in Bermuda to avoid taxes? The loophole’s still there. Remember how he promised to expand national-service opportunities for patriotic young Americans by 50 percent? Last week - despite bipartisan action in the Senate - he still hadn’t lifted a finger in the House for a measly $100 million to keep AmeriCorps from being slashed by 40 percent, leaving kids untutored and after-school programs facing closure. Who is he for first? The question is not just if the president tells the truth but if the truth - finally - will be told about him.

© 2003 Newsweek, Inc

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