More Tall Tales From the Bush Administration

[andyfox]

"If the United States were a true empire, vice president Cheney said, "we would certainly preside over a much greater piece of the earth's surface than we currently do."

This after Cheney said on National Pubic Radio that two trailers discovered after the war contained proof of Iraq's biological weapons programs.

Meanwhile the president said that the weapons search, from which the chief arms inspector resigned, saying that our prewar data was flawed, had proven that Iraq had "weapons of mass destruction-related program activities," an interesting use of linguistic obfuscation, even for a man who does it so often and so well (sometimes intentionally, sometimes not).

This is precisely the way for a political party to lose the White House, against all odds. The Democrats managed to do it in 1968 after winning by a landslide in 1964 and they haven't really recovered since. Meanwhile, another headline says "2 in Iraq Overbilling Are Fired Halliburton Says." The vice-president, of course, said "Halliburton gets unfairly maligned simply because of their past association with me."

John Kerry may start thinking about his cabinet soon.

[adios]

I haven't had a chance to read other threads on your latest replies to my posts. Anyway a quote from Kerry:
John Kerry on Budget & Economy

Q: Your plan to balance the budget?
KERRY: I'm going to do what Clinton did. I'm going to cut the deficit in half in the first four years. Clinton's plan was to balance the budget in 10 years, not the five Governor Dean says. The reason we decided not to do it in five was because it required extraordinary cuts in the things we just talked about doing investing in the city of Detroit, investing in our schools, investing in health care, making our economy move.

Source: Democratic Presidential 2004 Primary Debate in Detroit Oct 27, 2003

Bush policy kept economy afloat in recession-keep some of it
GEPHARDT [to Kerry]: [Maintaining any part of the Bush tax plan] is the wrong policy, and let me tell you why. This plan has failed. The president's economic plan has failed. And we should not keep half of a failure or a quarter of a failure. If it's failed, let's change the policy. Let's do something else. We'll go back to the Clinton tax code. I led the fight in 1993 to put those changes in place; it worked. And my plan will give more money to the average family than the Bush tax cuts.
KERRY: Going back to the Clinton tax cuts, doesn't create another job, it puts a burden on current predicament of middle-class Americans. They lose their current revenue. What's kept America's economy moving in the last two and a half years has been consumer spending. If all of a sudden, when we're trying to recover, we sucked a whole lot of money out of those consumers, we are not going to be able to keep the economy moving. It's the wrong policy.

Source: Debate at Pace University in Lower Manhattan Sep 25, 2003

No excuse for special tax cuts for the rich
Q: How will you balance the budget?
A: The first thing we have to do is to roll back the Bush tax cut for the wealthiest Americans. Fiscally responsible tax cuts for working families can grow the economy, but there is no excuse for special tax cuts for the rich. Then we can create jobs and invest in our people. With the right economic plan, we can turn our economy around, invest in people and reduce deficits all at the same time.

Source: MoveOn.org interview Jun 17, 2003

Voted NO on prioritizing national debt reduction below tax cuts.
Vote to table [kill] an amendment that would increase the amount of the budget that would be used to reduce the national debt by $75 billion over 5 year. The debt reduction would be offset by reducing the tax cut in the budget framework from $150 billion
Bill S Con Res 101 ; vote number 2000-55 on Apr 5, 2000

Voted NO on 1998 GOP budget.
Approval of the 1998 GOP Budget which would cut spending and taxes.
Status: CR Agreed to Y)78; N)22
Reference: H. Con. Res. 84 as amended; Bill H. Con. Res. 84 ; vote number 1997-92 on May 23, 1997

Voted NO on Balanced-budget constitutional amendment.
Approval of the balanced-budget constitutional amendment.
Status: Joint Resolution Defeated Y)66; N)34
Reference: S. J. Res. 1; Bill S. J. Res. 1 ; vote number 1997-24 on Mar 4, 1997

From the national taxpayers union website:



The Return of Fuzzy Math and Risky Schemes: How Presidential Hopefuls Would Deepen Deficits


Note the following regarding Mr. Kerry and how much he wants to increse the current budget deficit by $265.11 billion. Also note in the article that if all of Bush's 2003 tax cuts were rescinded (something Kerry said he doesn't want to do) it would add at most $135 billion to federal revenues. Note how Kerry would increase the deficit by $265.11 billion:

John Kerry

John Kerry leads the pack of Democratic Presidential candidates in the military/veterans policy category. The Senator's pledge to support veterans' health programs carries a cost of over $41 billion. The bulk of Kerry's spending, however, comes in the form of a $55.9 billion education agenda, an $89.88 billion health care platform, and $31.04 billion in infrastructure improvements.

Included in Kerry's education plan -- the second priciest of the Democratic proposals -- is a $2.25 billion offer of more affordable child care, an expanded Head Start program, and $25 billion in school renovations. The Kerry health care plan allows Americans to buy into the same arrangement offered to Members of Congress -- at a taxpayer cost of $89.5 billion per year. Senator Kerry's infrastructure program entails $31 billion in restored highway funding and $35 million in funding for a high-speed rail programs.

Also not included in this his proposals is to increase the forces in Iraq by 2 whole divisions.

Here's the article:

The Return of Fuzzy Math and Risky Schemes: How Presidential Hopefuls Would Deepen Deficits
NTUF Policy Paper 148
by
Drew Johnson

Jan 19, 2004


Campaign pundits continue to wonder whether Howard Dean's candidacy for President will get the final boost it needs to prevail in this month's key Democratic primaries with former officeseeker Al Gore's recent endorsement.

Yet, Gore's indirect presence in the race also reminds taxpayers of his duels with George W. Bush over fiscal policy in the 2000 Presidential contest. While Gore labeled Bush's tax reduction and Social Security reform plans as "risky schemes," Bush accused his opponent's budget platform of suffering from "fuzzy math." Today, as eight Democrats vie for their party's top nomination, many deficit-conscious Americans may be wondering if such terms are applicable to the 2004 race.

Each of the Democrat contenders for the White House disparaged recent projections of huge budget shortfalls (nearing $500 billion for Fiscal Year 2004) for their own rhetorical purposes. For example, front-runner Howard Dean states he will commit to "set the nation on the path to a balanced budget."[1] For his part, Dick Gephardt recalled that "two short years ago, we were having arguments about what to do with the surplus" and announced that "the President's economic policy has failed."[2]

Joseph Lieberman has accused White House officials of "hiding behind the war and homeland security to excuse their own fiscal irresponsibility,"[3] while John Kerry claims "this Administration has turned fiscal responsibility on its ear."[4] Wesley Clark has declared he "would restore the basic principle of responsibility to the budget process: all tax and spending proposals must be paid for without increasing the deficit."[5]

Despite their different approaches, to a person, the eight Democrat Presidential candidates call for spending increases that would substantially swell the deficit. On average, the candidates' proposals would pile an additional $479 billion onto the federal deficit beyond planned spending (a 21.5 percent increase in the budget).[6]

This Policy Paper systematically examines the fiscal implications of the eight contenders' agendas, using neutral techniques to assign a running cost tally to each budget proposal publicly offered by the candidates.

Highlights include:

Out of over 200 cost-associated proposals offered by the candidates, just two would reduce federal spending.
All candidates offer platforms that call for more spending than would be offset by repealing the Bush tax cut.[7]
Five of the eight candidates' health care spending proposals would cost over $100 billion in the first year alone.
Table 1 depicts the summarized cost data that National Taxpayers Union Foundation calculated for each candidate's platform.

Table 1. New Spending Proposed by Democratic Presidential Candidates

Candidate
Total Proposed Spending Increase (Annual, in Billions)

Sharpton
$1,327.01

Kucinich
$1,060.35

Gephardt
$368.76

Kerry
$265.11

Dean
$222.9

Clark
$220.66

Edwards
$199.48

Lieberman
$169.55

Source: National Taxpayers Union Foundation calculations.


The study relies heavily upon National Taxpayers Union Foundation's BillTally project, a computerized accounting system that has, since 1991, tabulated the cost or savings of every piece of legislation introduced in Congress with a net annual impact of $1 million or more.

Each Appendix following the text of this report includes the various elements of a Presidential candidate's platform, divided into 12 policy areas that could conceivably impact annual federal spending. This section summarizes every candidate's platform and presents figures revealing a reality that strongly contradicts the campaign rhetoric.

Wesley Clark

The costs associated with General Clark's platform are largely a result of an economic stimulus plan that doles out $60 billion to job creation programs and state and local governments over a two-year span, as well as a $55 billion plan to upgrade the electrical grid. The economic/employment policy presented by Clark also funds a new incarnation of AmeriCorps, at a cost of $200 million. Clark's $78.11 billion health care plan, among the least expensive proposed by the candidates, devotes a significant share of tax dollars to non-coverage-related health care improvements.

In addition to Clark's economic, infrastructure, and health care plans, his $5 billion international aid plan is among the largest of any candidate. A $2.17 billion proposed commitment to the military and veterans affairs ranks him third in that category. Clark manages to submit cost-associated policy proposals in all but one of the 12 policy areas considered in this study, a feat matched only by Howard Dean.

Howard Dean

Howard Dean's proposed $223 billion platform places him sixth-highest in terms of overall proposed costs. Despite this middling number, no candidate outspends Dean in an unmatched four different policy categories. Dean heads the field in proposed spending for agriculture/rural, campaigns and elections, civil rights, and international aid. Additionally, Dean offers the second most expensive scheme to address military funding and $105 billion in new health care commitments.

A number of costly policy proposals account for Dean's showing across so many categories. The campaigns and elections plan proposed by Governor Dean includes a "five-to-one" public match for the first $100 of every donation to a federal candidate, more than triple the cost of the next most expensive proposal. A suggested $30 billion contribution towards the global HIV/AIDS effort makes Dean's international aid total more costly than any other candidate by a billion dollars a year. A plan allowing federal employees to name same-sex partners as beneficiaries is, by itself, more expensive than the total proposed spending in the civil rights category of any other candidate. Other major cost-bearing proposals by Dean include $11 billion per year in early childhood education, $6 billion per year for higher education, and a $100 billion job creation fund.

John Edwards

The platform offered by Senator Edwards is, with the exception of Joseph Lieberman, the least costly of the Democratic proposals. That comparatively low cost is, however, deceiving. Edwards ranks among the top three for proposed spending in half of the 12 policy categories. Additionally, Edwards has no federal spending-related proposals in four of the study's 12 policy areas: housing, infrastructure, international aid, and military/veterans. Thus, the Senator is among the three "most expensive" candidates in three-fourths of the categories in which Edwards offers a proposal. A $59 billion health care plan, the lowest level of increase among the candidates, helps to lessen Edwards' overall proposed spending total.

Edwards' homeland security plan is, by nearly $2 billion, the most expensive of the Democratic proposals. The Senator's plan for the economy would earmark over $95 billion for programs such as a dollar-for-dollar matching savings account for working-class households and $40 billion in state aid. Plans granting one year of tuition-free education and doubling investments in teacher training increase the cost of the Edwards platform by an additional $6 billion.

Richard Gephardt

The $369 billion in new spending proposed by Representative Gephardt makes his agenda the costliest of the major contenders. Five of the 12 policy areas depicted in the study for Gephardt are void of cost-associated proposals, and another -- civil rights -- calls for less than $15 million in new spending. The six remaining policy areas feature a $20 billion homeland security trust fund, $5 billion in increased student financial aid, and $42 billion for a pre-school plan.

Further inflating Gephardt's total is the costliest economic plan of any candidate and a sizeable health care program, combining for $234.88 billion in potential spending. Gephardt proposes to supplement his initial $68.87 billion health care plan with an additional $167 billion dedicated to health insurance incentives. Specifically, Gephardt calls for a $109 billion "refundable" (i.e., in excess of actual tax liability) credit to employers who do not currently offer health insurance to their employees and a $58 billion commitment to assist state and local governments in addressing their health insurance burdens.

John Kerry

John Kerry leads the pack of Democratic Presidential candidates in the military/veterans policy category. The Senator's pledge to support veterans' health programs carries a cost of over $41 billion. The bulk of Kerry's spending, however, comes in the form of a $55.9 billion education agenda, an $89.88 billion health care platform, and $31.04 billion in infrastructure improvements.

Included in Kerry's education plan -- the second priciest of the Democratic proposals -- is a $2.25 billion offer of more affordable child care, an expanded Head Start program, and $25 billion in school renovations. The Kerry health care plan allows Americans to buy into the same arrangement offered to Members of Congress -- at a taxpayer cost of $89.5 billion per year. Senator Kerry's infrastructure program entails $31 billion in restored highway funding and $35 million in funding for a high-speed rail programs.

Dennis Kucinich

Representative Kucinich weighs in with the second-costliest policy platform among all the Democratic candidates. Kucinich's $1.06 trillion plan would increase the federal budget by nearly 50 percent.[8] Enacted in full, the Kucinich agenda would increase the federal deficit by over 15 percent in the first year of his Presidency alone.[9]

Among Kucinich's major proposals are a $20 billion-per-year infusion to the Department of Housing and Urban Development, a $48 billion commitment to tuition-free higher education, a $60 billion universal pre-kindergarten program, and $87 billion for a set of refundable payroll tax credits. A proposed $52.57 billion reduction in Pentagon spending falls far short in offsetting a $500 billion "New Deal"-style public works program intended to update infrastructure, including water and sewer systems and government buildings.

Kucinich's infrastructure plan alone outspends the entire platforms of all but two other candidates and his health care blueprint is as expensive as every policy proposed by candidates Lieberman, Edwards, and Clark combined.

Joseph Lieberman

Of the eight Democratic Presidential candidates, Senator Lieberman has, by about $30 billion, the least cost impact on American taxpayers. However, Lieberman's tendency to frame much of his platform around funding increases and program expansions -- without any specifics as to the amount of increase or breadth of expansion -- prevents accurate cost estimates and thus artificially lowers the Senator's estimated policy costs. In the area of infrastructure, for example, six of the eight candidates support a well-defined program, while Lieberman calls for adequate investment "in the technologies that will secure America's critical infrastructure, such as the power grid, the financial system, air traffic control, and the telecommunications and Internet infrastructure from physical and cyber-attacks."[10] While this undertaking is likely to cost tens, if not hundreds, of billions of dollars, it is impossible to estimate a cost for such an ambiguous goal.

Of note among the policies included in Lieberman's platform is his $8 billion environmental program -- over 23 percent more costly than that of John Edwards, author of the next most expensive environmental program. A $117 billion health care proposal leaves only Kucinich, Sharpton, and Gephardt with more expensive health care designs. In addition to a $75 billion medical coverage plan, Lieberman calls for $27 billion in new health care research funding and creation of a new $15 billion agency -- the American Center for Cures -- dedicated to developing treatments for threatening diseases.

Lieberman also calls for a $300 tax rebate to the 34 million taxpayers who did not receive a refundable tax credit in 2001. The potential expense of this wealth redistribution disbursement, given in large part to those who pay little or no federal income taxes, tops out at $10.2 billion.

Al Sharpton

Reverend Sharpton plans to address the principal policy issues of concern to his campaign platform not through programs or funding modifications, but rather through a series of Constitutional Amendments. By expanding the powers enumerated by the Constitution, these amendments would grant the federal government increased authority to create additional programs and enact previously unlawful policies. Thus, areas of political oversight once unavailable to the government would fall under federal control, at taxpayer expense, following the passage of new amendments. Of course, ratification of a Constitutional Amendment is subject to a supermajority vote of both Houses of Congress and approval of the legislatures of 38 states.

Despite tendering very few proposals bearing a direct cost -- only two of the 12 policy areas within the study contain cost-associated suggestions -- Sharpton still manages the most expensive platform among the Democratic Presidential candidates. The large price tag associated with Sharpton's plan is mainly due to his proposal for a universal, single-payer health plan, which totals $1.32 trillion. Sharpton calls for a five-year, $250 billion infrastructure redevelopment plan, as well.

Conclusion

Despite all the hand-wringing about George W. Bush's recent tax cuts, the spending column trips up every one of these candidates. Each would increase spending by substantially more than the supposed increase in federal revenues resulting from overturning the Bush tax cut. The candidates' fiscal policies would necessarily result in greater tax hikes, a deeper deficit, or both. This study does not consider that the temptation to spend even more money can be much greater after entering the White House. Consider President Bush, who, after campaigning as a fiscal conservative, has seen federal spending increase by 23.7 percent since taking office.[11] Even the most parsimonious of the eight Democratic candidates for President eclipses that total by over 15 percent.[12]

The budget cannot possibly be balanced with such astronomical increases in government expenditures as those proposed by the Democratic Presidential candidates. Unless the candidates change their stance on spending, any talk of balanced budgets and decreasing deficits, or criticism of another candidate for their budgetary policy, is little more than a disguise to cover the budgetary hole they plan to dig deeper still -- and American taxpayers will bear the burden of climbing out.

About the Author

Drew Johnson is a Policy Analyst for the National Taxpayers Union Foundation (www.ntu.org). NTUF is the research arm of the National Taxpayers Union, a non-profit, non-partisan organization founded in 1969 to work for lower taxes, less wasteful spending, and accountable government at all levels.

Research assistance was provided by Jeff Dircksen, Director of Congressional Analysis, National Taxpayers Union Foundation and Demian Brady, Senior Policy Analyst, National Taxpayers Union Foundation.

Notes

[1] Statement from candidate's website, www.deanforamerica.com/site/cg/ index.html?type=page&pagename=policy_statement _economy.

[2] Remarks at debate in Iowa, May 17, 2003, cited at www.ontheissues.org/House/ Dick_Gephardt_Budget_+_Economy.htm.

[3] Quoted in James G. Lakely, "Deficit Blamed on Economy, Iraq War," Washington Times, July 16, 2003; www.washtimes.com/national/20030715-114936-3973r.htm.

[4] Statement from candidate's website, www.johnkerry.com/pressroom/releases/pr_2003_0715.html.

[5] Statement from candidate's website, www.clark04.com/issues/economicplan/.

[6] www.whitehouse.gov/omb/budget/fy2004/pdf/hist.pdf.

[7] Even by liberal (generous) estimates, the projected federal revenue reduction in 2004 as a result of the 2003 tax cuts is $135 billion; www.cbpp.org/6-4-03tax.htm.

[8] Based on Fiscal Year 2003 information found at: www.house.gov/budget/04markkeyfacts.htm.

[9] Based on information current as of 1/7/2004; www.publicdebt.treas.gov/opd/opdpenny.htm.

[10] www.joe2004.com.

[11] http://www.cmonitor.com/stories/market/bizstori2003/ 120603spending_bush_2003.shtml.

[12] Based on one-year Democratic Presidential candidate spending applied over the same length of time.

About the study:

Study: EVERY Democrat Presidential Candidate's Platform Would Raise, Not Lower, Federal Budget Deficits

Study: EVERY Democrat Presidential Candidate's Platform Would Raise, Not Lower, Federal Budget Deficits

(Alexandria, VA) -- Long on rhetoric, short on restraint: that's the conclusion of a detailed review of each Democratic Presidential candidate's fiscal policy agenda released today by the non-partisan National Taxpayers Union Foundation (NTUF). Despite expressing concern over red ink in the federal budget, every one of the eight hopefuls would worsen the deficit by billions or even trillions of dollars.

"All the Presidential challengers have to varying degrees disparaged the current size of federal deficits," said study author and NTUF Policy Analyst Drew Johnson. "Yet, our examination of the candidates' spending promises reveals an inconvenient fact: the deficit potholes they're complaining about on the road to the White House would only deepen under their own policies."

The NTUF study systematically examined the fiscal policy implications of the eight contenders' agendas, using campaign and third-party sources (like the Congressional Budget Office) to assign a cost to each budget proposal offered by the candidates. For actual legislation that the candidates have endorsed, the study also relies on NTUF's BillTally project, a computerized accounting system that has, since 1991, tabulated the cost or savings of every piece of legislation introduced in Congress with a net annual impact of $1 million or more. Highlights of the study include:

If the policy agenda of any one of the eight candidates were enacted in full, annual federal spending would rise by at least $169.6 billion (Lieberman) and as much as $1.33 trillion (Sharpton). This would translate to a yearly budget hike of between 7.6% and 59.5%.
All candidates offer platforms that call for more spending than would be offset by repealing the Bush tax cuts (using even generous estimates of the tax cuts' impact).
The eight candidates have proposed over 200 ideas to increase federal spending, and only two that would cut federal spending. Those two proposals have been offered by Dennis Kucinich (thus, the seven other candidates haven't made a single proposal to cut any spending).
Although they may attempt to stress their policy differences, Howard Dean and Wesley Clark would both increase annual federal outlays by roughly the same amount ($222.9 billion vs. $220.7 billion, respectively).
Among those candidates considered to be "competitive," Dick Gephardt posts the largest annual spending increase ($368.8 billion), far ahead of John Kerry ($265.11 billion).
Johnson noted that the study "does not even consider that the temptation to spend more money can increase after entering the White House." George W. Bush, for example, who campaigned as a fiscal conservative in 2000, has presided over a jump in federal spending of 23.7% since taking office. Yet, Johnson still found that even the most parsimonious of the Democrat Presidential candidates would have outpaced the spending run-up under Bush by 15%.

"During the 2000 Presidential election, the candidates traded charges of 'fuzzy math' and 'risky schemes' over each other's fiscal policy proposals," Johnson concluded. "Given the results of this study, many deficit-conscious Americans may be wondering if such terms are applicable to the 2004 race too."

NTUF is the research and educational arm of the National Taxpayers Union, a non-profit citizen group founded in 1969. Note: NTUF Policy Paper 148, The Return of Fuzzy Math and Risky Schemes: How Presidential Hopefuls Would Deepen Deficits, is available online at www.ntu.org. Also available are detailed reports, separated into policy categories, on each candidate's platform costs.

In case anyone is interested here's what some economists have to say about rescinding tax cuts:

About the letter:

116 Distinguished Economists Warn Congress: Don't Strangle Economic Recovery with Tax Hikes on Earnings, Options

116 Distinguished Economists Warn Congress: Don't Strangle Economic Recovery with Tax Hikes on Earnings, Options

(Alexandria, VA) -- The current jump in economic growth could quickly return to a slump if Congress repeals recent tax cuts or enacts new taxes on a key incentive for start-up businesses. That's the message 116 economists, led by Nobel Laureate Milton Friedman, delivered to lawmakers today in an open letter organized by the 350,000-member National Taxpayers Union (NTU).

"Economic recovery is always tricky, but heightened international tensions and the post 9/11 threat of domestic terrorism add to the difficulties," the statement explained. "Consequently, Congress needs to be especially careful not to enact tax policy which would harm financial markets, businesses, or consumers." Signatories hailed from a broad cross-section of academic institutions, think tanks, and private economic analysis firms.

NTU drafted the letter in response to two controversial tax proposals that Congress may consider after it returns to session next week. Some lawmakers seek repeal of all or part of the tax reductions enacted over the past three years, a move the signatories contend "would hurt the private sector, and consequently generate far less revenue than tax hike proponents claim." The economists stated that the tax cuts have "been quite beneficial to the economy" because they "have both lowered the aggregate tax burden and also lowered government-imposed barriers -- such as high marginal tax rates -- to economic growth."

Yet another often-discussed scheme would limit the amount of stock option expense a firm may deduct from taxable income to the actual amount reported in financial statements. "The effect of this change," the economists point out, "would be to raise billions in taxes, because private sector accounting rules … would leave companies with little choice but to take a deduction for options based on the lower 'fair value' when they are issued, rather than the higher 'intrinsic value' when exercised." Besides unfairly denying the full tax deduction for the real expense businesses incur in providing options, changing the tax law would also adversely impact small start-up firms, who must issue options because they often cannot afford to compete for talent with cash compensation.

The signatories acknowledged that Congress should be "rightly concerned about federal budget deficits," but nonetheless urged lawmakers "to recognize that the deficits have been caused by the economic slowdown and a run-up in federal spending." They concluded that "Congress should address its spending excesses and also enact policies that further economic growth. But the federal government should not hike taxes by reversing the recent tax cuts or by limiting what firms may deduct as stock option expenses. These actions are wrong and would imperil the economic recovery now underway."

NTU President John Berthoud, who organized the open letter and holds a Ph.D. in Political Economy from Yale, concluded that, "This statement is a clear warning from the best economic minds in America today: the job-creating, innovating businesses that will lead the next phase of our economic resurgence are depending upon Congress to avoid rash tax hikes and embrace fiscal restraint."

NTU is a non-profit, non-partisan citizen group working for tax reform, less wasteful spending, accountable government, permanent reductions in tax rates, and fair tax treatment for all businesses. Note: The full text of the economists' letter to Congress, a list of signatories, and two NTU Issue Briefs on stock option expensing and making recent tax cuts permanent, are all available at www.ntu.org.

The letter:

An Open Letter to the United States Congress

We, the undersigned economists, urge Congress to avoid enacting tax measures which would endanger the nation's economy as it continues to emerge from the recent slump. Economic recovery is always tricky, but heightened international tensions and the post 9/11 threat of domestic terrorism add to the difficulties. Consequently, Congress needs to be especially careful not to enact tax policy which would harm financial markets, businesses, or consumers.

Specifically we urge Congress to avoid two much-discussed tax proposals: 1) repealing all or part of the tax cuts adopted over the past three years, 2) limiting the amount that firms may deduct as a stock option expense.

First, the tax cuts adopted over the past three years have on the whole been quite beneficial to the economy. The tax cuts have both lowered the aggregate tax burden and also lowered government-imposed barriers -- such as high marginal tax rates -- to economic growth. Quite simply, eliminating some or all of these tax cuts (raising taxes) would hurt the private sector, and consequently generate far less revenue than tax hike proponents claim.

Second, there have been efforts in Congress to limit the amount that firms may deduct as a stock option expense from taxable income to the actual amount they report in financial statements. The effect of this change would be to raise billions in taxes, because private sector accounting rules (GAAP -- Generally Accepted Accounting Principles) would leave companies with little choice but to take a deduction for options based on the lower "fair value" when they are issued, rather than the higher "intrinsic value" when exercised. Companies would be able to deduct far less from taxes than what the options cost them as an expense.

The net result from altering the tax rules on stock option expenses would be disastrous. This change would move billions of dollars from the private sector into government coffers and represent the largest tax increase in a decade. Further, giving stock options to employees represents a real expense for firms and should be fully tax-deductible. Any other tax treatment is unfair. Finally, this change would hit start-up companies the hardest. These are exactly the businesses that need to use stock options the most. Without stock options, these firms would not be able to generate the great amount of innovation and jobs that they have in recent decades.

Many in Congress are rightly concerned about federal budget deficits. But we urge Congress to recognize that the deficits have been caused by the economic slowdown and a run-up in federal spending. The deficits did not come about because individuals or corporations are under-taxed. We believe that Congress should address its spending excesses and also enact policies that further economic growth. But the federal government should not hike taxes by reversing the recent tax cuts or by limiting what firms may deduct as stock option expenses. These actions are wrong and would imperil the economic recovery now underway.

Sincerely,

William P. Albrecht
University of Iowa
Donald L. Alexander
Western Michigan University

Charles Baird
California State University - Hayward
King Banaian
St. Cloud State University

Doug Bandow
American Legislative Exchange Council
William W. Beach
The Heritage Foundation

John Berthoud
National Taxpayers Union
Thomas E. Borcherding
Claremont Graduate University

Michael Brandl
The University of Texas - Austin
Steven Buccola
Oregon State University

Mary Bumgarner
Kennesaw State University
Richard C. K. Burdekin
Claremont McKenna College

Henry N. Butler
Chapman University
Noel D. Campbell
North Georgia College & State University

Gregory Chow
Princeton University
J. R. Clark
University of Tennessee - Chattanooga

John P. Cochran
Metropolitan State College of Denver
Jeffrey H. Dorfman
University of Georgia

Robert B. Ekelund, Jr.
Auburn University
Richard E. Ericson
East Carolina University

Frank Falero
California State University
Fred Foldvary
Santa Clara University

William F. Ford
Federal Reserve Bank of Atlanta
Micah Frankel
California State University - Hayward

Milton Friedman
Hoover Institution, Stanford University
David Garthoff
The University of Akron

Gerald T. Garvey
Claremont Graduate University
Gabriel Gasave
San Jose State University

James F. Gatti
University of Vermont
Joseph A. Giacalone
St. John's University

David Gitlitz
Trend Macrolytics, LLC
Peter Gordon
University of Southern California

Wendy L. Gramm
Mercatus Center
Scott F. Grannis
Western Asset Management

William B. Green
Sam Houston State University
John G. Greenhut
Arizona State University - West

Alfred J. Hagan
Pepperdine University
David L. Hammes
University of Hawaii - Hilo

John R. Hanson, II
Texas A&M University
Stephen Happel
Arizona State University

Steven Horwitz
St. Lawrence University
Guido Hülsmann
Ludwig von Mises Institute

Laurence R. Iannaccone
George Mason University
Marianne Jennings
Arizona State University

Jim Johnston
Amoco Corporation (retired)
Raymond J. Keating
Small Business Survival Committee

Richard La Near
Missouri Southern State University
Arthur B. Laffer
Laffer Associates

Russell Lamb
North Carolina State University
Robert A. Lawson
Capital University

Dwight Lee
University of Georgia
Ken Lehn
University of Pittsburgh

Donald L. Luskin
Trend Macrolytics, LLC
Paul MacAvoy
Yale University

Glenn MacDonald
Washington University - Saint Louis
Yuri N. Maltsev
Carthage College

John Matsusaka
University of Southern California
Merrill Matthews
Institute for Policy Innovation

Fred S. McChesney
Northwestern University
John Merrifield
University of Texas - San Antonio

Andrew P. Morriss
Case Western Reserve University
Michael C. Munger
Duke University

Anthony Negbenebor
Gardner-Webb University
Lee E. Ohanian
University of California - Los Angeles

James B. O'Neill
University of Delaware
William Orzechowski
Orzechowski & Walker

E. C. Pasour, Jr.
North Carolina State University
Judd W. Patton
Bellevue University

Mark J. Perry
University of Michigan - Flint
Penn R. Pfiffner
Fiscal Policy Center at the Independence Institute

Charles R. Plott
California Institute of Technology
Barry W. Poulson
University of Colorado

Richard W. Rahn
Discovery Institute
John Rapp
University of Dayton

W. Robert Reed
University of Oklahoma
Christine P. Ries
Georgia Institute of Technology

Paul H. Rubin
Emory University
Raymond Sauer
Clemson University

Byron Schlomach
Texas Public Policy Foundation
Larry Schweikart
University of Dayton

Robert Haney Scott
California State University - Chico
Larry J. Sechrest
Sul Ross State University

Howard Segermark
Segermark Associates, Inc.
Carlos Seiglie
Rutgers University

Stephen Shmanske
California State University - Hayward
William F. Shughart, II
University of Mississippi

James F. Smith
University of North Carolina - Chapel Hill
Russell Sobel
West Virginia University

Mark Steckbeck
Hillsdale College
E. Frank Stephenson
Berry College

Houston H. Stokes
University of Illinois - Chicago
Courtenay C. Stone
Ball State University

John Tatom
DePaul University
Rebecca A. Thacker
Ohio University

Henry Thompson
Auburn University
Michael J. Tomas, III
University of Vermont

David G. Tuerck
Beacon Hill Institute at Suffolk University
Grace-Marie Turner
Galen Institute

Ludwig M. Van den Hauwe
Ludwig von Mises Institute
Robert Vigil
Analysis Group, Inc.

Richard E. Wagner
George Mason University
William B. Walstad
University of Nebraska - Lincoln

Jude Wanniski
Polyconomics, Inc.
John T. Wenders
University of Idaho

James B. Whisker
West Virginia University
Michael E. Williams
University of Denver

Walter E. Williams
George Mason University
Douglas Wills
University of Washington - Tacoma

Wayne Winegarden
Economic Solutions, LLC
Gary Wolfram
Hillsdale College

Gene C. Wunder
Washburn University
Paul J. Zak
Claremont Graduate University

Mokhlis Y. Zaki
Northern Michigan University
Asghar Zardkoohi
Texas A&M University

Michael Zimmer
University of Evansville
L.H. Zincone, Jr.
East Carolina University



An Open Letter to the United States Congress

The message in the letter is that higher corporate taxes, mean less jobs, which means increased worker misery, which means less government revenues, which means more goverment handouts, which means more government spending. If a tax and spend liberal like Kerry gets elected it could be an economic disaster but probably won't be as the likely outcome is federal government gridlock. The Democrats won't win a majority in the House and are likely to lose seats in the Senate. Kerry is a decided dog in the election in more ways than one.

[Eihli]

You are an idiot. Quit trying to use unfounded justification to win an argument that is sorely made. Point put, the man is doing a fine job as president but since you, sir, are more capable of filling the job as president you should run. Quit being critical on the man, hes got a difficult job and i am pleased at the effort puth forth as of now.

Also are you denying Iraq had chemical weapons?
I think its proven that they did.
The anthrax they used to kill 10,000 kurds...I guess that didn't exist?

It is just a matter of when and where we find them, so shut your mouth and coerce your effort into being critical of someone who actually needs it, like Michael Jackson.

[brad]

'Also are you denying Iraq had chemical weapons?
I think its proven that they did.
The anthrax they used to kill 10,000 kurds...I guess that didn't exist?
'

thats it in a nutshell. the american public is simply totally propagndized and couldnt recognize the truth if it hit them with a 2 by 4

[Wake up CALL]

"John Kerry may start thinking about his cabinet soon."

God you are funny Andy. You are grasping at straws sir. The only cabinent Kerry needs is the one he will be building to pay off his loans unless the rich Mrs. offers to bail him out.

[Utah]

Wait - I guess I have been completely brainwashed by the evil doers in the Bush administration. Gosh, how stupid of me. Thanks for setting the situation straight.

Just curious though, how did the Bush administration get all those kurds to play dead in those gastly pictures?

[Taxman]

I love how your entire article of pages and pages is all based fron the NTU website, which is clearly a biased source. I also like how they don't talk about how many billions of dollars go to the military, far more than any other of the programs they are complaining about. They do mention the increase in government spending, but this doesn't qualify. If they're going to criticize the platforms of the democratic candidates, they should also take a look at more things about the current administration than it's tax cuts and vague comments about spending. Based on the democratic platforms presented so far, even if they did repeal the tax cut, they would also significantly reduce spending. Thus neither side can be entirely correct by their model. In this way, the plethora of information introduced here fails to make neither Kerry nor Bush look like the answer. Again, corporate taxes differ from individual income taxes. It is possible to modify only some of the various taxes. I feel like many supporters of Bush have a real problem defining any faults in his presidency. No president has ever been perfect, but some people would have you believe that the current one is as close as we've been. Perhaps this is a knee jerk reaction to the various criticisms of him, but such things are an integral part of politics. I can only hope that the perspective of history will reveal to those people, the big picture that they were missing during these last few years.

[MMMMMM]

I think brad may be mistaking brainwashing for merely confusing anthrax with VX or some other chemical agent in this instance. Maybe Moloch got ahold of him, eh, brad? ;-)

[AleoMagus]

Saddam had anthrax all right, and you americans should know - you gave it to him.

The following is an excerpt fron an AWTW news service article:

In March 1988, during the Iran-Iraq war, Saddam Hussein sent in his air force to bomb Halabja for three days. This Iraqi Kurdish town is 11 kilometres from the Iranian border, and Saddam wanted to punish its inhabitants for taking advantage of the war to rise up against his regime. On March 16, Iraqi jet fighters made 20 bombing runs, dropping chemical and nerve gas on Halabja. They killed more than 5,000 people within a few hours.

Now, in his 29 January State of the Union speech, President Bush used this incident as a reason for the US to go to war against Iraq: “The dictator who is assembling the world’s most dangerous weapons has already used them on whole villages, leaving thousands of his own citizens dead, blind or disfigured.”

The problem with Bush’s story is that the US helped Iraq perpetrate that attack and then covered up for Saddam. In fact, Bush’s own people are personally responsible.

In 1980, alarmed by the overthrow of the keystone to American influence in the Middle East, the Shah of Iran, the US encouraged Iraq to attack Iran. As the current issue of A World to Win magazine explains, “Later, as famously revealed in the ‘Iran-Contra’ scandal, the US also gave weapons to Iran to prolong the war and make sure that there was as much killing and mutual weakening of both regimes as possible. (A million people died in this war.)

“The US first sent anthrax stock to Iraq in 1978, with seven shipments in all in the following decade. President Reagan sent Rumsfeld as his special envoy to meet with Saddam in December 1983, and re-opened the US embassy in Baghdad. In March 1984, the day that the UN released a report condemning Iraq’s use of poisonous gas against Iranian troops, Rumsfeld was meeting with Saddam’s Foreign Minister Tariq Aziz. In 1986, the Pentagon assigned officers to work with their Iraqi counterparts to increase the killing power of Saddam’s air force. In March 1988, that air force dropped gas bombs on Halabja, an Iraqi village under the control of rebel Kurds, killing several thousand civilians. German companies provided the gas itself. Amidst world uproar and protest, US officials claimed that they had reviewed the evidence and found it ‘inconclusive’. That year, under the presidency of Bush the father, Washington approved the export of virus cultures for military use to Iraq, as well as a $1 billion private contract to build a petrochemical plant designed to be equally usable to make mustard gas. Bush senior also approved sending Iraq $500 million in aid (in the form of subsidies to buy American farm products) and doubled that the following year. The UK, too, sent Iraq weapons-related equipment after the Halabja attack.… Eventually, the Iranian regime became more ‘reasonable’ by US standards and Saddam’s ambitions proved to be a less than perfect fit with those of the American imperialists, so Bush the father set out to destroy Iraqi power in 1991.”

In fact, in 1988, Bush’s father prevented the UN Security Council from condemning Iraq for the same crime that Bush the son is now trying to use as a moral pretext to once again bomb and invade Iraq.

For the record, UN sanctions have directly led to the deaths of over a million citizens of iraq - mostly children.

I know Saddam is a bad guy, and it is good for Iraq that he is gone, but don't kid yourself about the Bush administration either - they have more chemical, biological, nuclear weapons than they could have ever expected to find in Iraq in GWB's biggest wet dream. I don't know why though, when it is so easy to kill a million here or there with diplomacy alone. I guess the American's nukes and chemicals are ok though because they would never use them (they give them to other people to use, then attack those guys later).

Regards,
Brad S

[Al_Capone_Junior]