New York

Do They Take Us for Fools? Yes.

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Corporate tax bill passes—but not the smell test

At least this morning’s New York Times got the headline right: “A Tax Bill, Full of Breaks, Passes Senate.”

But to honor Jacques Derrida“I always dream of a pen that would be a syringe, a suction point rather than that very hard weapon”—I can’t help but parse the story’s first paragraph, thereby making my life, and yours, more complicated and, more or less, in a relative sense, vis-à-vis, ceteris proximally paribus, more frustrating. But I’m still not as bad as the U.S. Senate, which deconstructed our future.

The first paragraph in Edmund L. Andrews‘s story:

After nearly three years of jockeying by legions of business groups, the Senate passed a $137 billion corporate tax bill on Monday that gave something to almost everyone.

“Something to almost everyone”? Only if you’re a corporate citizen. Considering what the senators have done to us ugly bags of mostly water, let’s hope that they will someday be hoist by their own Picard.

On down in the story, Andrews does give voice to John McCain, who said of the corporate tax bill, “It is the worst example of the influence of special-interest groups I have ever seen.”

But as for depth, well, Andrews merely splashes around in the shallow end, saying:

Technically, the new law is projected to be revenue-neutral for the Treasury because it pays for the new tax breaks by closing down many tax shelters, eliminating some tax preferences, and increasing customs fees on imported goods.

He just parroted the official line. Go to the Center on Budget and Policy Priorities for a reality check. The center’s Joel Friedman, writing just before the bill passed, noted that the bill finances “a raft of new corporate tax cuts” and then really started plucking the chicken:

Many are narrowly focused, special-interest tax breaks that offer no benefit to the economy as a whole. These tax cuts only serve to erode the corporate tax base at a time when corporate tax revenues have fallen to historically low levels, and evidence of corporations engaging in tax-avoidance schemes is abundant. …

In fact, despite an official cost estimate that shows the bill to be deficit neutral, the measure is likely to lead to higher deficits in the future. The bill includes a number of temporary tax cuts, many of which are candidates for inclusion in the growing list of “extenders”—those temporary tax cuts that are routinely extended. If these new tax breaks are extended in coming years without being paid for—a likely scenario in the absence of pay-as-you-go rules that require the cost of such tax to cuts be offset—the result will be higher deficits.

Congress and the Bush regime just played the ol’ shell game with this bill and the misnamed “middle-class tax-cut” bill (which came up in the Cheney-Edwards debate; see this Bush Beat item).

Regarding the corporate tax bill, the Times‘ Andrews naively writes that George W. Bush “has indicated he will sign the measure despite White House concerns that it is overloaded with special-interest provisions.” That’s malarkey about White House “concerns.” The Bush regime, which includes leaders of the GOP-controlled Congress, knew that senators of both parties would waddle over to the trough and slurp up the bill’s “surplus” so they could excrete it as a steaming pile of pork-barrel projects. The structure of this session’s two major tax bills is all part of the White House’s shrewd strategy to reward corporations at our expense.

No parsing is necessary to understand the conclusion reached by the center’s Friedman:

The corporate tax package should not be viewed in isolation. It should be seen in the context of the “middle class” package signed into law on October 4. The tax cuts in that legislation cost $146 billion through 2014, with none of the costs being offset. The revenue-raising provisions in the corporate tax bill could have been used to offset nearly all of those costs.

In other words, Congress could have extended those popular “middle-class” tax cuts without damaging the budget. Instead, Congress chose a far more fiscally irresponsible approach. It used the revenue raised from repealing an illegal export subsidy and closing corporate tax shelters to pay for a dizzying array of new, mostly corporate tax breaks, while using deficit-financing for the “middle-class” bill.