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Monday, February 07, 2005

Federal Budget

There being no time, at the moment, to comment at length on today's big national news item (Bush Proposes Steep Cuts in $2.57T Budget - Newsday/AP), I will have to provide an extract from an earlier election commentary (Election 2004 Primer (Part 5): Cocaine) I published in The Catalyzer Journal:

According to CBSNews:

President Bush wants to make his tax cuts permanent. And now he's talking about simplifying the tax code. "I will lead a bipartisan effort to reform and simplify the federal tax code," the president said at last month's Republican convention. Former IRS commissioner Fred Goldberg says something has to be done. "Tax reform is an imperative at this point," Goldberg says. "I think the current system is broken beyond repair." But it's not gonna be easy. "Fundamental tax reform will bring the lobbyists out of the woodwork like cockroaches," [Scott A.] Hodge says. That's because the current tax code includes incentives for social policies that we've gotten used to -- like eductions for home mortgage interest, charitable donations, even the purchase of fuel-efficient cars. The simpler the tax code, the less likely all these special exemptions will be in it. "Fundamental tax reform will bring some of these politically motivated social policies to an end," says Hodge.

Privatization of Social Security is also on the list, as is expansion of sub-minimum-wage Workfare. As for overtime rules, the issue has been tabled until after the election. He fully intends to allow elderly to purchase Canadian drugs, if they prove to be safe, after the election. A great deal, it turns out, that one might think he wished to remove as an election issue he assures us is only waiting until after the election.

The Scott A. Hodge referred to, in the CBS piece, is the President of the Tax Foundation and rose through the ranks of the Heritage Foundation to his position. The Heritage Foundation was the immediate progenitor of supply-side economics, just prior to the Reagan Administration, and is particularly well known for manufacturing supply-side "experts" via its minor league system. The Tax Foundation was itself formed in 1937 in order to oppose the Depression-era tax policies of then President Franklin Delano Roosevelt. It receives its grant monies from many of the same sources as the Heritage Foundation and makes the absolutely bizarre claim that it is "non-partisan". In other words, The Tax Foundation began as a Hoover-ite, laissez-faire propaganda unit and has since been wedded to the resoundingly supply-side Heritage Foundation in a marriage of first cousins.

After a mid-2001 luncheon with Pamela Olson, Deputy Assistant Secretary of the Treasury for Tax Policy, the Tax Institute informed its members that:

For the long term, economists at the Council of Economic Advisers are studying a number of proposals to fundamentally overhaul the tax code, including the flat tax and the national retail sales tax. Any Administration action on these proposals will have to wait for a second Bush term.

For the supply-side economist the Hoover-ite program lives on. These 80 years have only been a brief interlude. In his or her mouth, the phrase "bring some of these politically motivated social policies to an end" -- or any of its standard variations -- means one and only one thing: bringing graduated taxation to an end.

The "politically motivated social programs" referred to also consist of such items as the minimum-wage, college tuition assistance, the Occupational Safety and Health Administration (OSHA), the Federal Communications Commission, the Food and Drug Administration, the Federal Trade
, the Department of Energy and the like, all or large portions of which are slated for demolition in the aftermath of "tax reform". Without graduated taxation, and the insidious government interference it underwrites, corporate America will once again be unleashed in all of its glory. Market forces will make the decisions once made in these bastions of socialism.

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