Bush's Stimulus Plan Benefits Rich to Detriment of Others

I'm not sure what Dubya thinks he's stimulating, but if it's the egos and bank accounts of the very wealthiest Americans, he proposed just the solution last week at a speech before the Economic Club of Chicago.

The centerpiece of his $674 billion monstrosity of an economic stimulus plan is the immediate elimination of taxes on stock dividends, a provision that would cost $364 billion.

But stocks in 401(k) accounts are already tax-sheltered, and this proposal gives big breaks only to the most affluent investors who own lots of stock outside their retirement accounts.

Notably, the Bush plan includes no aid to any of the states, nearly all of which, like North Carolina, are experiencing extreme budget shortfalls. In fact, individual states are responsible for many of the taxes on dividends in place, and eliminating these taxes will hinder rather than help the their economies.

Although the Bush plan does increase the amount of the child tax credit and eliminate the so-called "marriage penalty," measures Democrats and I support, it ignores provisions such as cutting payroll taxes for middle- and lower-income families or providing each person with an income tax rebate, a measure central to the $136 billion Democratic alternative.

According to an analysis done by the moderate Urban Institute and the Brookings Institution, the Bush proposal overwhelmingly benefits the rich. Both that study and one conducted by the Tax Policy Center concur that 28 percent of the benefits would go to the wealthiest 1 percent of Americans, while the top 10 percent of earners would receive 59 percent of the tax breaks. Only 8 percent of the total would be left to the bottom 60 percent of the population.

Granted, those who earn the most money pay the most taxes, and thus a tax cut for them would be larger than for the poor.

But let's be honest. These numbers are simply absurd.

William Gale, a Brookings economist, told The Washington Post that the after-tax income of those who earn more than $1 million a year would increase by an average of $88,873, or 3.9 percent. However, those Americans who earn less than $40,000 would enjoy after-tax income increases of 0.1 to 1.0 percent.

What should really infuriate the average American even more than the plan itself is the propaganda and obfuscation in its presentation. Even the term "stimulus package" is a misnomer. Less than $100 billion of the cuts, approximately one-seventh of the proposal's total cost, take effect in the first year.

Stimulating the economy does not entail putting inordinate sums of money into the hands of those who already have everything they need and will not immediately consume goods and services but rather providing aid for those in the middle- and lower-income tax brackets, who truly need the relief.

And lest anyone criticize the skewed and unjust distribution of benefits in the Bush proposal -- oh, the insolence! -- they are immediately accused of waging "class warfare," in the expectation that this will intimidate and prevent them from questioning or condemning the plan.

Rep. Charles Rangel, D-N.Y., told The New York Times,"It is class warfare, and they've declared it. ... Here the president kicks the hell out of the poor and tells us we're guilty of class warfare."

I haven't even mentioned what this plan will do to the federal budget deficit, especially when coupled with a unilateral war in Iraq and a missile defense system that won't work.

We need to spend money to ensure satisfactory health care and education for all people, not just give another handout to those who don't need it.

Didn't Bush's father have something to say about trickle-down "voodoo" economics?

Reach Rachel Gurvich at gurvich@email.unc.edu.