Monday, September 12, 2005

How Come It's Class Warfare Only When We Fight Back?

This week's column answers two questions that I've always wondered about: Can I get Yiddish into the Tribune? And if a Yiddish tree falls in the East Valley forest, would anybody other than me understand what it means? So far based on the emails, the answer is pretty much, other than my editor, "no."

But I love a good political food fight. In response to my column on 9/4, Kyl wrote a piece published on 9/8, which had enough material in it that despite having to catch a plane at 2 pm, I could dash off this week's column in the morning. We'll see if he wants to continue dragging himself down to my level in the public prints. You can read him in printer-ready format or in newspaper format, as well as the printer-ready version and newspaper version of my column if you wish. I plan on having no official position whatsoever with the Pederson campaign, so my columns will continue to pass muster under the Chuck Coughlin-Horizon standard of impartiality.


East Valley Tribune, Sept. 11, 2005

If Sen. Jon Kyl’s defense of repealing the estate tax were a stock, the SEC would bust him for fraud.

Kyl says that his estate tax “compromise” will “only” cost one-third of my estimate, or $290 billion instead of nearly $1 trillion. He (and the Congressional Budget Office) get the smaller number because they include (as I painstakingly noted in the original column) only four actual years of repeal. So the real cost of 10 actual years is $745 billion, plus another $225 billion in additional interest costs. Again, this is the same sort of budget trickery that made the administration’s Medicare drug “benefit” fit the budget, for a year -- then the numbers exploded when you have to include a year with the plan actually in effect.

Kyl claims that we can give a new estate tax cut because “the deficit is currently on track to drop by half.” Note that he can’t claim that the deficit will be eliminated; even under their best possible projections, the GOP and Bush administration will spend far more than the government’s revenues. This is called “moving the goalposts” -- victory isn’t a balanced budget, but merely one that’s somewhat less out of balance.

And those figures are now even more inaccurate, because (as I also noted) they don’t include any spending for the war in Afghanistan, the war in Iraq, or the recovery from Hurricane Katrina -- which is now at over $70 billion, and according to the Bush administration, that’s just for the next few weeks. None, zero, zilch of this spending is included in those rosy deficit-reduction scenarios.

What’s worse, those scenarios also include resumption of the estate tax at 2000 levels in 2011, because that’s current law. So not only is billions of spending that we know is coming -- that Kyl has already voted to spend -- not included in those projections, so are billions in revenue that he wants to give back to really rich people.

So that’s Kyl’s budget flim-flammery. Now in talking about the estate tax, he claims that “members of the tiny minority of extraordinarily wealthy Americans . . . usually avoid the death tax altogether.” Nowhere does he cite any study or evidence of this absurd proposition.

Think about it. If Kyl’s little fairy tale is true, then why are those extraordinarily wealthy Americans spending all this money on lobbyists and TV ads? Why in the world would extraordinarily wealthy people like the Mars candy and Campbell soup heirs and the publisher of the Seattle Times care about the tax rate --unless they actually face paying the tax?

The Wal-Mart heirs never got involved in politics before, but they’re spending tons of (non-deductible) money on this particular cause. Why? As Michael Graetz, a former Bush I Treasury official noted, those heirs “would save billions of dollars in tax” if Kyl gets his way.

If the point is to protect small businesses ($10 million being “small”), then we could bump up the lifetime exemption. But that wouldn’t help the very rich -- which is why Kyl, on their side in this particular class war, wants to use most of the amount on the rate cut, not increasing the exemption.

Finally, Kyl acts like it’s some natural disaster which nobody could foresee that the estate tax disappears in 2010 and reappears in 2011, and that we need to fix that pronto. But that’s exactly what he voted for in 2001. If that’s a problem, he created it.

Lots of observers (like me) pointed out the absurdity of the one-year repeal at the time. (“Grandpa, for New Year’s, we’ve decided to take up skydiving. You first.”) If the Bush tax cut only had room for so much in estate tax relief, it could have been used for a permanent increase to the exemption. But Kyl and Bush decided that this no tax in 2010, and full resumption in 2011, was better. And now they’re so surprised that they were wrong.

Not only are Kyl’s numbers as bogus as a Fife Symington financial statement, but he’s complaining about a problem he himself caused. Only a Yiddish word can describe this kind of behavior: Chutzpah.

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