Starving the Beast (Or, Maybe the "Happy Days" Are Here Again)

Here is the result of four years (and counting) of massive tax cuts:

• Total federal revenues (as a share of our economy) are the lowest since 1959
• Federal individual income tax revenues are the lowest since 1951

I wasn’t alive in the 50s, so I confess that I don’t have so much nostalgia for those good old days. The Cunningham’s seemed happy enough, but then I don’t recall any episodes where Mr. and Mrs. C fretted about long-term care for their aging parents, or where Mr. C worried that family health insurance premiums of $17,000 per year were putting a dent into his take home pay from the hardware store. Apparently, all of Mr. C’s coworkers made enough money selling nuts and bolts that there were no concerns about health costs, college tuition and housing.

A lot has happened since the 50s. Given all that we’re getting now, I wonder why we’d want to reduce revenues to the levels they were back then. Here are a few things that we weren’t paying for back then:

• Medicare (created in 1965) – provides access to health care to 42 million people who are aged 65 or over.
• Medicaid (1965)– provides access to health care to 42 million very low-income people who are aged 65 or older, have a severe disability, or are in a family with children.
• Earned Income Credit (1975) – supplements the wages of low-income workers; only social security lifts more people out of poverty.
• Food Stamps (authorized in 1970, extended nationally in 1975) – helps 24 million low-income people buy food.
• Interstate Highway System (1956) Nearly a quarter of all roadway traffic is on our 43,000 miles of interstate highways.

We might recognize the consequences of our massive tax cuts if every cut was accompanied by a reduction in spending.

Take the estate tax, for example. In 1997, half of estate tax revenues came from the largest 1 out of every 1,000 estates. The other half came from the next largest 17 out of 1,000 estates. Put another way, our Congress passed a $300 billion tax cut (over 10 years) that 982 out of a 1,000 of us would see no benefit from.

More recently, the House of Representatives voted to permanently repeal the estate tax, at a cost of $1 trillion over ten years–- again, benefitting very few people who are extraordinarily rich (and, no longer alive).

What if we actually wanted to "pay" for that tax cut? Well, we could eliminate the Environmental Protection Agency, but that $7.8 billion a year (FY 2005) wouldn’t make a dent in the trillion dollar cost. We could stop providing health insurance for 4 million kids through the State Child Health Insurance Program, but even that would only cover about one-twentieth of the tax cut. We could eliminate the Food Stamp Program. Twenty-four million people wouldn’t get nutrition assistance, but it would cover about 40 percent of the cost of this tax cut for a few really rich people who are no longer alive.

Or, maybe we’ll just pass the cost on to our kids. We’ll let them worry about paying for it.

Then, they’ll be able to look back and reminisce about our "happy days."

Do the choices of your elected officials reflect your values and priorities?