Blessed Are the Poor--They Don't Get Tax Cuts

By Joe Klein

There are moments in public life when all is revealed, when the true priorities of a politician or a political party--as opposed to the boilerplate and blather--stand naked in the public square. George W. Bush had one last week. The White House and the Republican congressional leaders were desperate to squeeze the Bush tax cut into the $350 billion limit set by the Senate. There were plenty of ways to do this; all sorts of accounting flummeries had already been perpetrated, but a final tweak was needed. So the Republicans decided that the working poor, who pay little or no income taxes--families with incomes from $10,500 to $26,625--should not receive the expanded child tax credit. Almost 12 million children were effectively denied stipends of up to $400. This saved an estimated $3.5 billion, or 1% of the final bill.

Nothing new here, you say? The Republicans have never been defenders of the poor. But Bush was supposed to be a different sort of Republican, a "compassionate" conservative. Indeed, it was ironic, and fairly nauseating, to hear spokesman Ari Fleischer argue last week that this was a matter of principle: the money should go to people who actually pay income taxes. Ironic because George Bush argued relentlessly and persuasively in 2000 that the working poor are hit harder by marginal tax rates than most Americans (because Social Security and Medicare taxes take a huge bite of their paychecks, and they lose credits as their incomes grow).

Bush talked more about the poor in 2000 than any major presidential candidate I'd seen in years. There were times he left his country-club audiences befuddled by his fervent tributes to reading labs in poor schools and to the aspirations of Mexican immigrants. After he was elected President, Bush surrounded himself with excellent people who cared about the poor--people like John DiIulio and David Kuo, who ran the faith-based program office; the speechwriter Mike Gerson and his then deputy, Pete Wehner. (Caveat lector: several of them are close friends of mine.) I figured this was one Republican Administration that really would take a fresh, serious look at antipoverty programs.

In 1997 Wehner--a devout Evangelical--wrote a courageous Op-Ed piece in the Washington Post that began with a question: "During His ministry, Christ spoke out most often about (a) the evils of homosexuality, (b) the merits of democracy, (c) family-friendly tax cuts or (d) the danger of riches? It turns out Christ said nothing about the first three and a lot about the last one. But you would never know it based on the rhetoric of many modern-day Christians--particularly politically active ones." Wehner recounted some of the most famous New Testament parables in which Jesus castigates the wealthy, and he concluded, "It's unwise for Christians to keep averting our gaze from warnings that Christ placed in bright neon lights."

I thought about Pete last week--he is now a deputy to Karl Rove--and wondered how he felt about the disgraceful wasteland that Bush's social policy has become. (Sadly, Pete didn't answer my call.) The tax cut, for example, is actually a double hit on poor children. In addition to the child tax credit fiasco, there is a potentially devastating impact on tax-free municipal bonds, which are used to finance major construction projects. Cities will have to offer higher interest rates to compete with private bonds now that all dividends are taxed at only 15%. That will be expensive, and it will certainly drain money from schools, crime and a host of other urban problems. And that is not all: Bush's Internal Revenue Service has decided to focus on fraud among recipients of the earned-income tax credit (EITC), another stipend given to working families with low incomes. The EITC was a terrific Republican idea, expanded by Bill Clinton. Fraud no doubt exists, and fraud is bad. But the money to be gained here is minuscule compared with, say, the estimated $20 billion lost each year from American companies that set up offshore headquarters to avoid taxation. (The Administration says it is hiring a thousand more agents to go after upper-income cheats.) Finally, the centerpiece of Bush's social policy--his bill supporting faith-based programs--collapsed, according to the now departed DiIulio, because the White House was more interested in a bill that pleased the Evangelical right than a compromise that might have actually passed.

Bush promised a foreign policy of humility and a domestic policy of compassion. He has given us a foreign policy of arrogance and a domestic policy that is cynical, myopic and cruel. He once said his favorite philosopher was Jesus. I assume he meant the same Jesus who taught that "no one can serve two masters. You cannot serve both God and Mammon." Politicians aren't saints, but is it unfair to ask whom George Bush was serving last week?