[Peace-discuss] Krugman on "tax cut"

[C. G. Estabrook]

Jobs, Jobs, Jobs

[SYNOPSIS: The opportunity cost of the Bush "job creation" tax cut
measured in jobs forgone per dollar is too great. Considering the new Bush
tax cut spends $500 thousand per new job created, isn't there a cheaper
way of creating 1.4 million jobs -- like, say, aiding the states in their
worst fiscal since the Great Depression so they don't have to cut more
jobs.]

Did you know that President Bush's economic plan will create 1.4 million
jobs? Oh, and did I mention that the plan will create 1.4 million jobs?
And don't forget, the plan will create 1.4 million jobs.

Republican politicians are obviously under instructions to push that job
number. On the Sunday talk shows some of them said "1.4 million jobs" so
often that it sounded like an embarrassing nervous tic.

Of course, there's no reason to take that number seriously. Basically, the
job-creation estimate came from the same place where Joseph McCarthy
learned that there were 57 card-carrying Communists in the State
Department. Still, let's pretend that the Bush administration really
thinks that its $726 billion tax-cut plan will create 1.4 million jobs. At
what price would those jobs be created?

By price I don't just mean the budget cost; I also mean the cost of
sacrificing other potential pro-employment policies on the altar of tax
cuts. Once you take those sacrifices into account, it becomes clear that
the Bush plan is actually a job-destroying package.

Not that the budget cost is minor. The average American worker earns only
about $40,000 per year; why does the administration, even on its own
estimates, need to offer $500,000 in tax cuts for each job created? If
it's all about jobs, wouldn't it be far cheaper just to have the
government hire people? Franklin Roosevelt's Works Progress Administration
put the unemployed to work doing all kinds of useful things; why not do
something similar now? (Hint: this would be a good time to do something
serious, finally, about port security.)

The answer is that we can't have a modern version of the W.P.A. because,
um . . . because tax cuts are essential to promote long-run economic
growth. Yes, that must be it. Just look at a new study by the
Congressional Budget Office, now headed by an economist handpicked by the
Bush administration. It concludes that the Bush plan may have either a
positive or a negative effect on long-run growth, but that in any case the
effect will be small. Wait, that's not the answer we wanted. Quick, find
another expert!

Meanwhile, the United States is in effect about to run a W.P.A. program in
reverse. That is, as a nation we're about to reduce spending on basic
needs like education, health care and infrastructure by at least $100
billion, maybe more. And these spending cuts Until recently it has been
hard to get people excited about the states' worst fiscal crisis since the
Great Depression. For about two years state governments were able to use
fancy financial footwork to put off the full effects, and the public
probably regarded warnings about looming catastrophe as exaggerated. But
now, as Timothy Egan reported yesterday in The New York Times, states are
"withdrawing health care for the poor and mentally ill. They are also
dismissing state troopers, closing parks and schools, dropping bus routes,
eliminating college scholarships and slashing a host of other services."
Not to mention unscrewing every third light bulb in Missouri government
offices. (Honest.)

Aside from their cruelty and their adverse effect on the quality of life,
these cuts will be a major drag on the national economy. So if the
administration really cared about jobs, it would provide an emergency
package of aid to state governments Oh, never mind. Anything that would
distract from the tax-cut message is out of the question. In fact, rather
than compromise on its goal of maximum long-run tax cuts for the wealthy,
the administration now says that it's willing to phase tax cuts in
gradually So when you take the policy consequences into account, it's
clear that the administration's tax-cut obsession isn't just busting the
budget; it's also indirectly destroying jobs by preventing any rational
response to a weak economy. In its determination to stay on message, the
administration is also determined not to do anything that would actually
help ordinary families.

But did I mention that the Bush tax plan will create 1.4 million jobs?


Originally published in The New York Times, 4.22.03

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  C. G. Estabrook, Ph.D., Visiting Scholar
  University of Illinois at Urbana-Champaign [MC-190]
  109 Observatory, 901 South Mathews Avenue, Urbana IL 61801 USA
  office: 217.244.4105 mobile: 217.369.5471 home: 217.359.9466
  <www.carlforcongress.org>
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