Bush's ruinous economic plans
WE WILL shortly hear from the president himself, but the outlines of his domestic program for a second term are already all too clear. Take five key areas of economic policy -- health, Social Security, energy, taxes, and the deficit.
All five have this in common: In each case the administration program doesn't really address the underlying problem. Rather, the purpose is either to help an industry ally, stir up the party base, or advance an ideological goal (or all three).
Health Coverage. Health insurance premiums have risen by more than one-third since Bush took office, leaving more and more people uninsured or underinsured. Families USA calculates from Census Bureau data that one nonelderly American in three was without health insurance at some point from 2002 to 2003. Meanwhile, employers and insurers are moderating their own costs by increasing copays and deductibles paid by consumers.
The president's proposed health program, a massive expansion of so-called health savings accounts, doesn't address the twin problem of dwindling coverage and rising costs. It simply accelerates the shift of those costs onto consumers and gives affluent people one more tax break. Health savings accounts are useful mainly for the healthy and the wealthy because they don't buy coverage that is both comprehensive and affordable.
Social Security. The Bush plan to privatize Social Security, in whole or in part, is back. But there is no way that privatizing the system will shore up its finances. Rather, it will do just the opposite by diverting payroll tax revenue needed for Social Security payouts into new private accounts. To keep the promise of Social Security intact, Bush would need either massive new borrowing or massive tax hikes. But the more likely result is reductions in benefits. Of course, these cuts, like the damage from his deficits, would hit long after Bush left office.
Energy. There's a growing consensus among experts that the most recent wave of oil price hikes is not mainly the result of market manipulation, refining bottlenecks, or the Iraq occupation but the harbinger of the long-predicted depletion of the world's extractable oil reserves. With the huge populations of China, India, and other emergent economies joining the global consumer society, demand is simply outstripping supply.
Bush's program is essentially deeper and wider drilling, lubricated by friendly tax and environmental policies. His support for conservation or alternative energy sources is token at best. Last week three Bush Cabinet secretaries, just in time for the Republican National Convention, belatedly conceded that science has proven the reality of global climate change caused by carbon emissions. Bush said he was unaware of the report.
Taxes. The tax program for a second Bush term will be more of the same. One goal will be to make the tax cuts of 2001 to 2004 permanent. A new twist will be a shift to consumption taxes -- either a value-added tax, a national sales tax, or new tax breaks for money saved rather than spent. The result will be an overall reduction of taxes paid by those wealthy enough to save substantially and a shift onto workaday voters who spend most of what they earn. This will be advertised as a program to create jobs and reward entrepreneurship, but it sure didn't work in Bush's first term -- the only presidency since Hoover with fewer payroll jobs at the end than the beginning.
The deficit. Hardly anyone, Republican or Democrat, truly believes that the Bush tax-and-spending program will do anything other than make the deficit problem worse. The Congressional Budget Office, whose director is appointed by congressional Republicans, projects endless deficits in excess of $400 billion a year. If Bush succeeds in making recent tax cuts permanent and adding new ones, the deficits will be even more serious. With military outlay rising, the administration's only game plan is to backload the effect of tax cuts until after this president leaves office and cut domestic spending even further.
As the latest Census report makes clear, the typical American is economically worse off than in 2001. The GOP game plan is to keep voters' attention riveted on the memory of 9/11 and the threat of terrorism. Otherwise John Kerry will eat Bush's lunch on the pocketbook issues.
It's a remarkable commentary on the ability of the administration to wave the flag and change the subject that Bush isn't held more accountable for the huge gap between his policies and their results. As the president himself so memorably attempted to say, "Fool me once, shame on you . . ."
Robert Kuttner's is co-editor of The American Prospect. His column appears regularly in the Globe.
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