Wednesday, February 16, 2005

Madame de Pompadour's Prophecy

During a time of military and fiscal crisis in 18th century France, Louis XV expressed his misgivings about the future of the nation to his royal favorite, Madame de Pompadour, who responded, "Après nous, le déluge." Years of extravagance and expansionism amidst diminishing national revenue were coming to a close. Having peasants bear the heaviest tax burden was simply not sustainable. Because of this failure of the tax system, the heirs of the Sun King were singing their swan song, and they knew it. But did they care?

After reading Paul Krugman's article of Feb. 11, I looked up the OMB deficit projections over the next ten years, and it occurred to me that her words could be the Bush-Cheney motto: "After us, the flood."

In discussing the "class-war budget" recently proposed by the Bush administration, Paul Krugman writes:
Here's a comparison: the Bush budget proposal would cut domestic discretionary spending, adjusted for inflation, by 16 percent over the next five years. That would mean savage cuts in education, health care, veterans' benefits and environmental protection. Yet these cuts would save only about $66 billion per year, about one-sixth of the budget deficit.

On the other side, a rollback of Mr. Bush's cuts in tax rates for high-income brackets, on capital gains and on dividend income would yield more than $120 billion per year in extra revenue - eliminating almost a third of the budget deficit - yet have hardly any effect on middle-income families. (Estimates from the Tax Policy Center of the Urban Institute and the Brookings Institution show that such a rollback would cost families with incomes between $25,000 and $80,000 an average of $156.)

Why, then, shouldn't a rollback of high-end tax cuts be on the table?
And here is the OMB projection (the red line):



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