Sacrifice Is for Suckers

by Robert Borosage

The Nation magazine, April 28, 2003

In his address to the nation on the eve of the invasion of Iraq, George W. Bush dismissed concerns about the war's cost by evoking the nation's proud history: "Americans understand the costs of conflict because we have paid them in the past. War has no certainty, except the certainty of sacrifice." But neither the war on Iraq, nor September 11, nor the precipitous decline in the nation's fiscal health has had the slightest effect on the President's overriding priority-cutting taxes, primarily for the "haves and have mores" that he calls "my base." The President expresses the nation's gratitude for those who "have sacrificed in our cause" in Iraq, but at home his clear message is that sacrifice is for suckers.

In fact, Bush is the first President in modern history to lead the country into a major war while calling on the wealthy to pay less in taxes. For World War I and World War II, taxes on the wealth and income of the richest Americans were raised sharply. During Vietnam, Lyndon Johnson put off paying for the war even as inflation began to soar but eventually called for a tax surcharge to help defray the costs.

With the "rollout" of the Iraq war well under way, Bush submitted a budget this year that called for an astounding $1.6 trillion in new tax breaks, heavily skewed to benefit the rich. People making $1 million or more a year are slated to pocket an average annual tax cut of $90,000. He called for permanent repeal of the estate tax on wealth, an acceleration of upper-income tax breaks passed last year and elimination of taxes on dividends, which accrue overwhelmingly to the most affluent. Bush and the Republican chorus defend this shameless giveaway as a "jobs and growth plan" to help get the economy moving. But according to the Administration's own optimistic figures, the plan will generate fewer than 200,000 jobs in the current year; the economy lost more than that number in February alone. Moreover, the President's plan may very well cost jobs in the long term as unending deficits drive up interest rates.

Bush kept the costs of the war secret, waiting until the fighting began to ask Congress for a $75 billion down payment, with more to come. And he presented no plan for raising revenues to cover the check. The $75 billion-more like $80 billion by the time Congress gets done with it-is simply to be tacked onto the deficit, now headed toward $400 billion for this year.

One appropriate way to begin paying the tab would be to crack down on corporations deserting the country in a time of trouble. The IRS estimates that US corporations and rich individuals cost the country about $75 billion a year by setting up phony headquarters or residences in offshore tax havens like Bermuda and the Cayman Islands. Majorities in both houses of Congress voted for legislation sponsored by the late Senator Paul Wellstone to bar these companies from bidding on homeland security contracts, but Republicans stripped the measure from the homeland security bill in closed conference. Among the corporate tax haven users have been Harken Energy, which set up an offshore tax dodge while Bush was on its board, and Halliburton, which under Vice President Cheney's leadership went from nine to at least forty-four offshore tax dodges.

Even the war wasn't enough to goad the Bush Administration into taking on its tax-dodging allies, nor has the call to sacrifice had any dampening effect on payoffs to party contributors. While American soldiers put their lives on the line, the Administration announced that the first round of contracts to rebuild Iraq after the military destroys it would be limited to a select group of US companies. When the list was published, the Center for Responsive Politics reported that the six companies had contributed $3.6 million to political campaigns over the past two election cycles, two-thirds of it going to Republicans. Or consider the President's major domestic initiative this year, the brazen prescription drug plan that requires seniors to join an HMO if they want a federally subsidized prescription drug benefit. Unacceptable even to Republican loyalists, this makes sense only as a direct pay off to the drug industry, which fervently opposes the use of Medicare's buying power to force lower prices on drugs. The President's plan was a pretty good return on investment for the nearly $20 million the companies spent on Republican candidates last fall.

Who pays for upper-income tax breaks in a time of war? A good portion is borrowed' with more than $2 trillion in added debt over the next ten years. The generation that is doing most of the fighting and their children will get stuck with the bill, even as they have to worry about financing their parents' retirement. Most of the rest of the tab is paid by those least able to afford it: the poor, the disabled and the young. The House Republican budget bill that embraced all the President's tax breaks and sought to balance the budget in six years made this clear.

As the reputable Center on Budget and Policy Priorities detailed, the House bill would cut a staggering $265 billion from entitlement programs as a whole: $92 billion from Medicaid, depriving poor children and the bedridden elderly of support; $12.5 billion from food stamps; and $14 billion from veterans' benefits, including even a cut in burial benefits. Another $244 billion would be cut from domestic discretionary spending-everything from health clinics and environmental protection to education, including 28,000 kids thrown out of Head Start. Even the President's touted "No Child Left Behind" plan to fund elementary and secondary education programs will face cuts of more than 8 percent in 2004 alone. And all this at a time when the states and localities struggle with the worst fiscal crisis in fifty years.

Tax breaks for the wealthy take precedence even over national security needs. As Republicans voted down repeated efforts to pay for the increased security costs borne by the states and cities, powerful Senate Appropriations chair Ted Stevens suggested that police and firefighters bear the burden by working overtime without pay as a wartime sacrifice. "Those people overseas in the desert-they're not getting paid overtime.... I don't know why the people working for the cities and counties ought to be paid overtime when they are responding to matters of national security," he said. So firefighters, 343 of whom gave their lives responding on September 11, should carry more of the load, while millionaires pocket the giveaways.

The House and Senate are scheduled to vote on a budget this week. But that will only begin the real fight over the tax breaks. The AFL-CIO and the Fair Tax Coalition are leading district meetings with legislators in late April to oppose the tax breaks. MoveOn.org, the Institute for America's Future, Working Assets and columnist Arianna Huffington are launching a campaign urging citizens to call their legislators to demand support for the Corporate Patriot Enforcement Act, which cracks down on offshore tax dodges. Faced with Republican defections, House Speaker Dennis Hastert called on Republicans not to embarrass their President in a time of war. You would think that the President's fight for privilege rather than shared sacrifice is embarrassment enough. The next time you see a haunting picture of a young soldier caked with dust in the desert think of the CEOs cheering him or her on from the beaches in Bermuda. And remember that the same President who has exposed the troops in the desert is sheltering those execs on the beach.

Robert L. Borosage is co-director of the Campaign for America s Future.

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