We can’t extend the Bush tax cuts

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JulianneMalveauxBox

(NNPA)—It took three months and a stern presidential scolding for the United States Senate to pass legislation that would extend unemployment insurance for more than 2.5 million Americans who have been out of work for a long time. Why did the Senate drag its feet? We couldn’t afford the $33 billion legislation, they said. We could afford a bank bailout, but not money for the unemployed? Many feel the legislation that finally passed will not do enough for the unemployed. It provides dollars for some, but what is really needed is a public works program, some real job creation.

I can already hear the deficit hawks posturing that we can’t afford it. At the same time, most Republican senators are pushing to extend the Bush tax cuts, those cuts that in 2001 and 2003 contributed mightily to the existing deficit. Let’s not forget that when President George W. Bush came into office, the Clinton administration had produced three years worth of surpluses, handing a healthy treasury over to Mr. Bush. In contrast, Mr. Bush had deficits in seven of his eight years in office. While Republicans love to talk about shrinking the size of government and wasteful government programs, the Bush tax cuts are responsible for nearly half of the existing deficit, according to the Center for Budget and Policy Priorities.

Now the Bush tax cuts are set to expire. Allowing them to lapse would put nearly $700 billion into the treasury. That’s enough to fund a jobs program or two, and enough to trim the existing deficit, as well. But the conservative mantra on finance is that if you repeat something often enough, it must be true. Some Republicans have said, “wasteful government spending” so much that Democrats who ought to know better have begun to believe it.

The House of Representatives have recessed for six weeks, and the Senate is likely to recess after taking action on legislation that would extend the Bush tax cuts. This sets legislators up, scant months before the 2010 election, to have a conversation about the economic direction of our country. The problem with the conversation is that it is being conducted in sound bites instead of analysis, with the assertion that deficits are bad dominating the conversation. Modest deficits have long been used effectively to foster economic growth and stability. Republicans are drawing a political, not an economic, line in the sand, and Democrats, frightened of being labeled “tax and spend” are going along with them.

Even former Federal Reserve Board Chairman Alan Greenspan agrees that letting the Bush tax cuts expire would not harm the economy. Most of those cuts went to people at the top of the income distribution, people who save, not spend, their money. If the cuts had been focused at the bottom end of the income distribution, letting them expire might cause more hardships on people who have already been hurt by our sluggish economy. But if the tax cuts had been focused on the bottom end of the income distribution, they would not have been Bush tax cuts. We are still paying the price for the tax cuts for the wealthy that Mr. Bush pushed a decade ago.

Allowing the Bush tax cuts to expire is an act of fiscal responsibility. In some ways, letting these cuts expires pumps needed dollars into our economy, both for existing programs and for deficit reductions. Those deficit hawks that say they want to reduce the deficit have an opportunity to do so, but their fealty to the flawed policies of the Bush administration, and their desire to pick a midterm election political fight prevent them from acting responsibly.

So, among its other questionable actions, the Senate proposed cutting food stamps to pay for Medicare and teacher jobs. Senator Harry Reid, D-Nev., in a tight re-election race, has too often embraced the Republican “pay go” argument to the detriment of the least and left out. For Democrats to allow Bush tax cuts to extend amounts to another capitulation. We need Democrats to show some backbone, and for Bush tax cuts, a bad idea when they were implemented in 2001 and 2003 to simply go away.

(Dr. Julianne Malveaux is an economist and president of Bennett College for Women in Greensboro, N.C.

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