The Bush Tax Increase?

Posted: Jan 05, 2004 12:00 AM

It's unclear why Howard Dean is so upset by the Bush tax cut, since he maintains that there wasn't one -- at least not for the middle class. "There was no middle-class tax cut," Dean declared at the Democratic debate in Iowa this week. "There was a Bush tax increase with tuitions, with property taxes, with health care premiums, and most middle-class people in this country are worse off because of the president's so-called tax cut."

Where to start? With Dean, it's not the gaffes that are most damning and ridiculous, but what he says every day.

First, Dean maintains that "60 percent of us got a $304 tax cut" that was swallowed up by all the other Bush "tax increases." But this is a misleadingly puny figure for the effects of the Bush tax cut -- because it includes in its average low-income people who pay no income tax and so got no benefit from it. According to The Boston Globe, 31.5 percent of married couples got a cut of between $2,001 and $5,000, and another 18 percent of married couples got a cut of between $1,201 and $2,000. Among families with children, 40 percent got a cut of between $2,001 and $5,000, and another 30 percent a cut between $1,201 and $2,000.

To maintain that the benefit of these tax cuts has been wiped away, Dean has to blame everything bad in the country -- up to, but not including, tooth decay -- on the Bush tax cuts. One of his theories is that President Bush has had to drastically cut various government programs to make up for the lost revenues, which is funny because all the Democrats are simultaneously blaming the federal deficit on the Bush tax cuts -- exactly because Bush has done nothing to restrain spending.

Another Dean theory is that if the price of anything is increasing, it must have been caused by the Bush tax cut. Some perspective: The price for almost everything has been remarkably steady recently. Inflation, even including volatile food and energy prices, is 1.8 percent. So, Dean latches on to the things that are, in the exception to the rule, increasing in price -- college tuitions, health care premiums and property-tax bills -- and blames them on Bush.

The cost of health care, however, has been increasing at twice the rate of inflation since about the mid-1960s. The Clintons were complaining about rising health care premiums back when they first took office, nearly a decade before Bush even thought about cutting federal taxes. The cost of premiums dipped in the mid-1990s, but has been climbing ever since 1996, through no fault of the Bush administration.

As for college tuitions, they have been growing at a rate exceeding the rate of inflation for years. So, how can the Bush tax cut be responsible? Dean charges that "the president cut Pell Grants in order to finance his tax cuts for his millionaire friends." Actually, nearly a million more students are getting Pell Grants than when Bush took office. What Dean must be referring to is a proposed adjustment in how the Department of Education calculates the eligibility for Pell Grants, a change mandated by a 1992 law. The proposal has been resisted in Congress, so no one has been "cut" from his or her Pell Grant.

Finally, whether property taxes have gone up in localities has to do with how states and localities have managed their finances. States that went on a spending binge during the boom years of the late 1990s have found themselves in fiscal crises requiring tax increases. State spending grew 38 percent between 1997 and 2002, and was still increasing at more than 5 percent a year in 2002 and 2003. Bush can't be blamed for the profligacy of governors.

So, why is Dean so reckless in his anti-Bush charges? In his world, where all evil traces back to a single source, there can only be one explanation: The Bush tax cut made him do it.