The wry phrase “A billion here, a billion there, and pretty soon you’re talking real money,” has been attributed to the late Sen. Everett M. Dirksen, R-Ill.
We wonder what he’d say about the $70 billion in tax-cut extensions the Bush administration and congressional Republicans are pushing while deficits from the Iraq war and other spending continue to pile up.
A $370 billion budget deficit is projected for this year, and the cost of the three-year-old Iraq war is nearing $278 billion.
Like a college-bound freshman who’s just been given his father’s credit card but no limits on using it, the Bush administration seems to be laboring under the delusion that it can continue to put it all on plastic and that some day, “Daddy” (future taxpayers) will settle up accounts.
On Tuesday, the White House and Republican leaders agreed on a package that would extend 2003 reductions in the tax rates for dividends and capital gains, tax breaks for small business investment and some financial service operations, and rein in the alternative minimum tax that increasingly has impacted the middle class.
The compromise negotiated by Senate and House Republicans would extend through 2010 the 15 percent tax rate for capital gains and dividends.
That rate was set to expire in 2008, when the top rate on long-term capital gains would revert to 20 percent and dividends would be taxed the same as other income.
Not surprisingly, Bush has pitched the extensions of the tax cuts as a benefit to families and businesses at a time when fuel prices are rising rapidly and taking a bigger bite out of incomes.
“A tax increase would be disastrous for business, disastrous for this economy,” Bush said.
True, relief from the alternative minimum tax, originally targeted at higher-income taxpayers, is needed because without it, 16 million additional taxpayers could be hit with the tax on their 2006 income.
The AMT as originally passed wasn’t indexed for inflation and other factors, so its effects have crept down the income scale into the middle class.
This may not be the end of tax-cut fever this year.
The bill won’t be up for a vote until House and Senate negotiators craft companion legislation for many other tax breaks that were left out of the compromise.
Despite attempts to paint the plan as good for all Americans, the deal is likely to revive criticism of Republicans as favoring wealthy investors over lower- and middle- income working people.
