From the Left: The obsessive presidency

By HAROLD MEYERSON  |  Jan. 21, 2003 at 4:01 PM
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WASHINGTON, Jan. 21 (UPI) -- Call it government by obsession. A real national security crisis explodes in the Far East, only to be pooh-poohed by an administration bent on resolving the crisis it has manufactured in Iraq. A real double-dip recession looms at home, to which the administration responds not by crafting an economic stimulus, but by cutting taxes for its disproportionately wealthy supporters.

Reward the rich and oust Saddam: These are not merely the primary priorities of the Bush presidency. They are the president's preoccupations, the policies he pursues come rain or shine, however much they are out of sync with the broader visions he himself has put forth.

The specific reason why we'd do well to wage war quickly against Saddam, the administration tells us, is that Iraq may have weapons of mass destruction it could use against its neighbors or deliver to terrorists to use against us. By these criteria, however, North Korea is plainly the more immediate threat. While we do not believe Iraq has nuclear weapons or is close to developing them, we do believe North Korea already has a bomb or two, and it is about to commence building more over the next half-year. The North has tested medium-range missiles in recent years, as Iraq has not, and it has now thrown out its U.N. arms inspectors, as Iraq has not. The North is more desperately poor and far more isolated than Iraq; Kim Jong Il is no less paranoid -- and far more likely to sell a bomb to al Qaida -- than Saddam.

For all the pains the administration has taken to justify the concept of preemptive war, it has failed to convince our allies -- or a majority of the American people -- that Baghdad today really has a war machine to preempt. Pyongyang, meanwhile, screams to the skies that it has one and is building a bigger one, and everyone believes it. If Bush wants to arrest a looming catastrophe and do so with international backing, he's sending troops to the wrong end of Asia.

But then, deposing Saddam doesn't have a lot to do with preempting a military threat, any more than it has something to do with impeding al Qaida or resolving the Israeli-Palestinian conflict or avenging 9/11. For the past year, the justifications have been adduced and abandoned in bewildering succession; what's remained steadfast is the president's determination to remove a ruler who's not merely evil but who slipped through Poppy's grasp and whose ongoing reign is a blot on the Bush family's shield.

Not all obsessions are dysfunctional, of course; far from it. Ginning up the war talk for last fall's election confused the Democrats and muted whatever meager message they had. It mobilized the Republican base. It helped produce a Republican Congress, which will enable Bush to indulge his other obsession -- enriching the rich.

Like the justifications for popping Saddam, the reasons that Bush has given for cutting taxes on the rich have been many, varied, contradictory, nonsensical and short-lived. They date back to his 2000 campaign, when candidate Bush bemoaned that with the economy booming, the treasury was awash in surpluses, the government had more money than it knew what to do with, and the only sensible course was to return it to the taxpayers, rich taxpayers particularly. By the time Bush took office, the economy was tanking, the surpluses were gone, and the only sensible course to stimulate the economy was to reduce the burden on taxpayers, rich taxpayers particularly. So Congress, at Bush's behest, cut taxes over the next decade by $1.3 trillion, more than 40 percent of that going to the wealthiest 1 percent of Americans. Nearly two years later, that tax cut has stimulated the economy right into a 6 percent rate of unemployment.

The mark of the true obsessive, though, is that when he sees his course of action is a proven floperoo, he does it again. And thus we have Stimulus II, a $674 billion extravaganza the centerpiece of which is the $364 billion elimination of taxes on dividends. The mere fact that this tax cut, if passed, will not take effect until 2004 only begins to suggest why this stimulus package isn't likely to stimulate anything but more economic inequality.

For starters, by providing nothing for state governments facing their biggest fiscal crisis since the '30s, the Bush package only assures more lay-offs, reduced services and higher state taxes all across the country. The projected budget shortfall of the 50 states this year ranges from $60 billion to $85 billion -- and as states tend to close about one-third of their deficits through higher taxes, the "Bush To States: Drop Dead!" policy means tax hikes of $20-30 billion at the state level.

Next, while a dividend tax cut may put more money into the market (it's an untested thesis as yet), it's not at all clear why it will boost business investment. Factories are idling today not because manufacturers are starved of capital, but because consumer spending is down (during the Christmas just passed, not a creature was stirring in many a store). That would suggest that public works spending or tax cuts for the working and middle class are needed to bolster consumers. But don't hurt your eyes trying to find these provisions in the fine print of Bush's plan.

What's visible across the room, however, is the upward redistribution of wealth at the center of the administration's proposal. According to Citizens for Tax Justice, the wealthiest 1 percent (a phrase we have to use a lot in discussing Bushonomics) will pocket nearly half of the eliminated dividend tax. The vast majority of shareholders -- those who own stock through their 401k's -- pay no dividend tax, and will therefore get no cut, but will still have to pay taxes when they withdraw their money after retirement. Gives a whole new meaning to the notion of "common" and "preferred" stock.

In the new Bush proposal, common Americans are not preferred. Middle-class Americans do rate a reduction, if nothing like that going to their richer betters, but only if they're married with children, the more the merrier. Married couples would get an additional $400 tax credit yearly for each child they have.

A political logic attends this cut: Married voters with children under 18 supported Bush over Al Gore by 56 percent-to-41 percent in 2000; all other voters backed Gore by 51 percent to 44 percent. As Karl Rove sees it, the child credit not only rewards the base, but it is a possible point of Republican entry to Latino voters as well. And whatever the risk to rewarding the rich, you at least ensure an even greater torrent of campaign cash than you had the first time out. Once again, Bush's obsessions need not prove electorally damaging -- at least, if the Democrats prove as inept in 2004 as they were in 2002.

Of course, the economy could always tank, and North Korea sell its nukes to Osama. But that is so not where this president is at.

(Harold Meyerson is editor-at-large of The American Prospect and political editor of the L.A. Weekly.)

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