Semi-Daily Journal

Two things we know about the pending war on Iraq:
1) Bringing up war before election time sure helps the president's party (just ask Andy Card and Karl Rove)
2) It becomes possible to attempt to slide in a completely ridiculous tax-cut boondoggle for the Administration's wealthy financiers while the country fixates on the moral question of war.

Somewhere Machiavelli is smiling. And would somebody please plug in the numbers for the ROI for the average Bush campaign contributor.

>>Add the cost of the inevitable fix to the unintended middle-class tax increases under the "alternative minimum tax."

I don't see why this administration would want to fix the AMT. Isn't it basically a flat tax which gradually replaces the progressive income tax if nothing is changed? Fixing this sounds much more like a Democratic initiative.

The "perhaps $20 billion" per year to police Iraq is (I hope I recall) based on 75k troops, but that is (I hope I recall) well below the Pentagon's own estimate of the necessary force size, as well as below credible private estimates. The "$20 billion for 75k troops" formula has taken on a life of its own, perhaps because the Bush administration prefers not to talk about uncomfortable topics associated with war, such as costs.

Eliminating the AMT sounds like a Democrat plan in that it preserves progressivity in the upper half of the income scale. Eliminating the AMT sounds like a Republican plan in that the AMT leaves tax rates higher for some better-off tax payers and collects more revenue than would otherwise be the case. Something for everybody like, something for everybody to oppose.

"Whatever happened to Treasury secretaries who see themselves as counterweights to White House political advisers who worry about the next election, not the next generation?"

They find themselves out on their a** like Paul O'Neill, at least in this administration.

Well, but the administration DOES have a plan for dealing with deficits beyond the next couple of years.

The Rapture.

k harris, you are right in your recollections about $20B = 75K troops.

That John Snow lacked intellectual honesty was fairly apparent from his resume (yet another crony capitalist with no real accomplishments other than collecting a paycheck and earning the approval of other smooth-talking well-dressed empty suits); that the WSJ editorial page (where david wessel doesn't write) is equally intellectually bankrupt has been clear ever since Bartley showed up there however many years ago; but we should be thankful that the actual economics and finance correspondents of the WSJ are willing to do honest addition (or would that be subtraction?).

Intellectual honesty in this Administration? Duh. The whole object of the Administration is to screen out appointees who have an iota of intellectual honesty. An appalling Administration.

March 13, 2003

Frist Forsakes Deal Making to Focus on Party Principles
By DAVID FIRESTONE - NYTimes

Ten weeks into his term, Senator Bill Frist has adopted a vastly different approach as majority leader, preferring the broad themes and political gestures favored by the White House and conservatives to the pragmatic, back-room tasks favored by his Republican predecessors.

While other Republican leaders, including Senators Trent Lott, Bob Dole and Howard H. Baker Jr., were more independent deal makers who prided themselves on keeping the legislative trains running, Dr. Frist is charting a different path as a committed conservative who says he does not intend to compromise his party's principles for momentum....

"No conceivable combination of reasonable assumptions can erase the problems in Social Security and Medicare," the president's budget warns. "They must not be left hanging over the heads of our children and grandchildren. The longer the delay in enacting reforms, the greater the danger, and the more drastic the remedies."

The Administration has set out from the beginning to undo Social Security and Medicare. That was the reason for the absurd "worry" over the surplus that led to the first awful tax cut and that is the reason for the next tax cut.

Get it. The Administration wishes to undo Social Security and Medicare!

Brad Brad Brad

The Wall Street Journal WELCOMES the deficit as a reason to wreck every possible socially progressive program, especially Medicare and Social Security.

"But look beyond the next couple of years, and the fiscal outlook isn't pretty. It'll take more than sprinkling tax cuts over the economy to set things right."

Interesting interesting comment. Get it. Tax cuts WILL help, but we also need huge cuts in social programs. Slash slash the free school lunch program. Rotten "fat cat" parents, signing children up for free school lunches when they really do not meet the guidelines. Tax cuts and slash social programs. That is the answer. Doh.

Budget Plan - Cut free school lunches for children and give away free lake front land for marinas and golf courses.

March 13, 2003

Developer Gets Rent-Free Deal on Federal Land
By DOUGLAS JEHL

The Army Corps of Engineers owns 456 lakes in 43 states, and under federal rules, private developers must pay fair market value to lease land from the corps along those lakes. But Ronald W. Howell, an Oklahoma lobbyist, a consultant and a prominent Republican fund-raiser, is one developer who recently found a cheaper way.

Last month, Mr. Howell and his company, StateSource L.L.C., signed a 50-year rent-free lease on 280 acres of lakefront at Skiatook Lake in Oklahoma, not far from Tulsa.

The deal was a sublease, between StateSource and the Skiatook Economic Development Authority, which had just leased the land free from the corps under an exemption that allows such arrangements for government agencies.

The authority then handed off the property to Mr. Howell, with the corps' full approval. Mr. Howell and his lobbying and communications company plan to build a $10 million marina, golf and cabin complex and, in the process, turn a profit....

http://www.nytimes.com/2003/03/13/politics/13CORP.html

Citation - for above

I agree with David Wessel's assessment of Treasury Secretary Snow.
I heard Snow on The Newshour with Jim Lehrer on Wednesday. He
claimed that the distribution of the Bush Growth Package (which
includes the dividend tax cut) was actually quite equitable. He
quoted some of the following distribution figures which can be found
on the Treasury website:

EFFECT OF BUSH GROWTH PACKAGE ON INDIVIDUAL INCOME TAXES
(Relative to Major Individual Income Tax Provisions in Effect in 2003)

Dist. of Total Average
Dist. of --------------- Taxes Percent
Cash Changes 2003 With With Change
Income in Taxes Law Proposal Proposal in Taxes
Class (%) (%) (%) ($) (%)
--------- -------- ----- -------- -------- --------
0 - 30 2.7 -2.0 -2.6 -416 -17.0
30 - 40 3.4 2.1 1.9 1,002 -20.1
40 - 50 4.4 3.7 3.6 2,243 -14.5
50 - 75 10.8 11.6 11.7 4,295 -11.4
75 - 100 12.7 12.1 12.0 7,562 -13.0
100 - 200 25.5 27.6 27.9 15,836 -11.4
200 & over 40.5 44.8 45.4 99,072 -11.2
--------- -------- ----- -------- -------- --------
Total 100.0 100.0 100.0 6,099 -12.3

Source: Department of the Treasury January 3, 2003
http://www.treasury.gov/press/releases/docs/table.pdf

Over half of the package's tax cuts over the next decade go to
the dividend tax cut. Why then does the distribution look so
equitable? The trick is that it includes the child tax credit. The
flaw of this inclusion is that the child tax credit is a tax CREDIT,
not a tax CUT. As such, it makes sense for all taxpayers who qualify
to get the same amount, not the same percentage. Hence, this and all
other credits should NOT be included when calculating the relative
percentages of tax cuts to determine fairness. One can argue how
large the child tax credit should be. But I have heard nobody
suggest that high-income taxpayers should get a larger child tax
credit than low-income taxpayers.

In any case, Snow repeatly stated that the solution to our deficit
and economic problems was to increase growth. In seems to me that
growth has become the new, painless "free lunch". In the past,
that free lunch was the debt which its proponents believed had no
limit or lasting cost. We are now saddled with interest costs of
several hundred billion dollars per year. The responsible thing to
do is to attempt to promote growth and, only once that growth had
occurred, adjust our taxes and/or spending. Besides being the
prudent course of action, it will do much more to promote policies
that truly promote sustainable growth.

I agree with David Wessel's assessment of Treasury Secretary Snow.
I heard Snow on The Newshour with Jim Lehrer on Wednesday. He
claimed that the distribution of the Bush Growth Package (which
includes the dividend tax cut) was actually quite equitable. He
quoted some of the following distribution figures which can be found
on the Treasury website:

EFFECT OF BUSH GROWTH PACKAGE ON INDIVIDUAL INCOME TAXES
(Relative to Major Individual Income Tax Provisions in Effect in 2003)

Dist. of Total Average
Dist. of --------------- Taxes Percent
Cash Changes 2003 With With Change
Income in Taxes Law Proposal Proposal in Taxes
Class (%) (%) (%) ($) (%)
--------- -------- ----- -------- -------- --------
0 - 30 2.7 -2.0 -2.6 -416 -17.0
30 - 40 3.4 2.1 1.9 1,002 -20.1
40 - 50 4.4 3.7 3.6 2,243 -14.5
50 - 75 10.8 11.6 11.7 4,295 -11.4
75 - 100 12.7 12.1 12.0 7,562 -13.0
100 - 200 25.5 27.6 27.9 15,836 -11.4
200 & over 40.5 44.8 45.4 99,072 -11.2
--------- -------- ----- -------- -------- --------
Total 100.0 100.0 100.0 6,099 -12.3

Source: Department of the Treasury January 3, 2003
http://www.treasury.gov/press/releases/docs/table.pdf

Over half of the package's tax cuts over the next decade go to
the dividend tax cut. Why then does the distribution look so
equitable? The trick is that it includes the child tax credit. The
flaw of this inclusion is that the child tax credit is a tax CREDIT,
not a tax CUT. As such, it makes sense for all taxpayers who qualify
to get the same amount, not the same percentage. Hence, this and all
other credits should NOT be included when calculating the relative
percentages of tax cuts to determine fairness. One can argue how
large the child tax credit should be. But I have heard nobody
suggest that high-income taxpayers should get a larger child tax
credit than low-income taxpayers.

In any case, Snow repeatly stated that the solution to our deficit
and economic problems was to increase growth. In seems to me that
growth has become the new, painless "free lunch". In the past,
that free lunch was the debt which its proponents believed had no
limit or lasting cost. We are now saddled with interest costs of
several hundred billion dollars per year. The responsible thing to
do is to attempt to promote growth and, only once that growth had
occurred, adjust our taxes and/or spending. Besides being the
prudent course of action, it will do much more to promote policies
that truly promote sustainable growth.

I agree with David Wessel's assessment of Treasury Secretary Snow.
I heard Snow on The Newshour with Jim Lehrer on Wednesday. He
claimed that the distribution of the Bush Growth Package (which
includes the dividend tax cut) was actually quite equitable. He
quoted some of the following distribution figures which can be found
on the Treasury website:

EFFECT OF BUSH GROWTH PACKAGE ON INDIVIDUAL INCOME TAXES
(Relative to Major Individual Income Tax Provisions in Effect in 2003)

Dist. of Total Average
Dist. of --------------- Taxes Percent
Cash Changes 2003 With With Change
Income in Taxes Law Proposal Proposal in Taxes
Class (%) (%) (%) ($) (%)
--------- -------- ----- -------- -------- --------
0 - 30 2.7 -2.0 -2.6 -416 -17.0
30 - 40 3.4 2.1 1.9 1,002 -20.1
40 - 50 4.4 3.7 3.6 2,243 -14.5
50 - 75 10.8 11.6 11.7 4,295 -11.4
75 - 100 12.7 12.1 12.0 7,562 -13.0
100 - 200 25.5 27.6 27.9 15,836 -11.4
200 & over 40.5 44.8 45.4 99,072 -11.2
--------- -------- ----- -------- -------- --------
Total 100.0 100.0 100.0 6,099 -12.3

Source: Department of the Treasury January 3, 2003
http://www.treasury.gov/press/releases/docs/table.pdf

Over half of the package's tax cuts over the next decade go to
the dividend tax cut. Why then does the distribution look so
equitable? The trick is that it includes the child tax credit. The
flaw of this inclusion is that the child tax credit is a tax CREDIT,
not a tax CUT. As such, it makes sense for all taxpayers who qualify
to get the same amount, not the same percentage. Hence, this and all
other credits should NOT be included when calculating the relative
percentages of tax cuts to determine fairness. One can argue how
large the child tax credit should be. But I have heard nobody
suggest that high-income taxpayers should get a larger child tax
credit than low-income taxpayers.

In any case, Snow repeatly stated that the solution to our deficit
and economic problems was to increase growth. In seems to me that
growth has become the new, painless "free lunch". In the past,
that free lunch was the debt which its proponents believed had no
limit or lasting cost. We are now saddled with interest costs of
several hundred billion dollars per year. The responsible thing to
do is to attempt to promote growth and, only once that growth had
occurred, adjust our taxes and/or spending. Besides being the
prudent course of action, it will do much more to promote policies
that truly promote sustainable growth.

I agree with David Wessel's assessment of Treasury Secretary Snow.
I heard Snow on The Newshour with Jim Lehrer on Wednesday. He
claimed that the distribution of the Bush Growth Package (which
includes the dividend tax cut) was actually quite equitable. He
quoted some of the following distribution figures which can be found
on the Treasury website:

EFFECT OF BUSH GROWTH PACKAGE ON INDIVIDUAL INCOME TAXES
(Relative to Major Individual Income Tax Provisions in Effect in 2003)

Dist. of Total Average
Dist. of --------------- Taxes Percent
Cash Changes 2003 With With Change
Income in Taxes Law Proposal Proposal in Taxes
Class (%) (%) (%) ($) (%)
--------- -------- ----- -------- -------- --------
0 - 30 2.7 -2.0 -2.6 -416 -17.0
30 - 40 3.4 2.1 1.9 1,002 -20.1
40 - 50 4.4 3.7 3.6 2,243 -14.5
50 - 75 10.8 11.6 11.7 4,295 -11.4
75 - 100 12.7 12.1 12.0 7,562 -13.0
100 - 200 25.5 27.6 27.9 15,836 -11.4
200 & over 40.5 44.8 45.4 99,072 -11.2
--------- -------- ----- -------- -------- --------
Total 100.0 100.0 100.0 6,099 -12.3

Source: Department of the Treasury January 3, 2003
http://www.treasury.gov/press/releases/docs/table.pdf

Over half of the package's tax cuts over the next decade go to
the dividend tax cut. Why then does the distribution look so
equitable? The trick is that it includes the child tax credit. The
flaw of this inclusion is that the child tax credit is a tax CREDIT,
not a tax CUT. As such, it makes sense for all taxpayers who qualify
to get the same amount, not the same percentage. Hence, this and all
other credits should NOT be included when calculating the relative
percentages of tax cuts to determine fairness. One can argue how
large the child tax credit should be. But I have heard nobody
suggest that high-income taxpayers should get a larger child tax
credit than low-income taxpayers.

In any case, Snow repeatly stated that the solution to our deficit
and economic problems was to increase growth. In seems to me that
growth has become the new, painless "free lunch". In the past,
that free lunch was the debt which its proponents believed had no
limit or lasting cost. We are now saddled with interest costs of
several hundred billion dollars per year. The responsible thing to
do is to attempt to promote growth and, only once that growth had
occurred, adjust our taxes and/or spending. Besides being the
prudent course of action, it will do much more to promote policies
that truly promote sustainable growth.

>>I don't see why this administration would want to fix the AMT. Isn't it basically a flat tax which gradually replaces the progressive income tax if nothing is changed? Fixing this sounds much more like a Democratic initiative.
<<

I suppose you could think of the AMT as a flat tax replacement -- but at a much higher level. If not changed, it will significantly raise tax rates for middle America.

A growing economy requires a growing supply of money. The government has but one mechanism for adding money to the economy: Running a deficit.
Deficits stimulate the economy by adding money. Surpluses cause depressions, because they remove money from the economy. Nearly every depression has been preceded by a federal surplus. The Great Depression was preceded by 7 years of surpluses.
The most recent recession was preceded by a surplus.
Anyone who believes a surplus is good for our economy and a deficit is bad, simply does not understand the history of our economy.

A growing economy requires a growing supply of money. The government has but one mechanism for adding money to the economy: Running a deficit.
Deficits stimulate the economy by adding money. Surpluses cause depressions, because they remove money from the economy. Nearly every depression has been preceded by a federal surplus. The Great Depression was preceded by 7 years of surpluses.
The most recent recession was preceded by a surplus.
Anyone who believes a surplus is good for our economy and a deficit is bad, simply does not understand the history of our economy.