Tonight there’s just one more nightmare to mull over while I try, fitfully, to sleep: the Bush camp has resurrected the dividend tax cut – but only for a few years (or so they say). This makes no sense at all, and even some Republicans are saying so. From the Post:
In its dogged pursuit of the dividend tax cut, the White House is pushing a temporary version that even some Republicans openly deride as bizarre and economically suspect. Under the proposal, the elimination of what has been called double taxation of dividends would be phased in — one-half next year, 75 percent in 2005 and 100 percent in 2006-07. Then, the current dividend tax rate would suddenly reappear.
… In a rare display of GOP discord, Kevin Hassett, an American Enterprise Institute economist with close administration ties, posted a Web site editorial calling the emerging Senate plan “one of the most patently absurd tax policies ever proposed.” The plan would discourage companies from offering dividends over the next two years, he said, and could harm the economy Bush wants to help.
… The financial markets will assume that Congress will not allow the dividend tax cut to be phased out, a White House official said, acknowledging that the dividend plan’s true cost would be far higher than the proposal’s official tally indicates.
… To underscore the cost issue, Senate Democrats resurrected the “debt clock” that chronicles the federal debt’s rapid rise. The administration is asking lawmakers to simultaneously pass its tax cut and to increase the nation’s $6.4 trillion credit limit by as much as $984 billion to avert a government default on its debt.
On Friday, the Congressional Budget Office raised its 2003 deficit forecast to at least $300 billion, a record level that does not include the cost of the proposed tax cut. Goldman Sachs yesterday reiterated its prediction that the government will ultimately be $425 billion in the red this year.
… But Bush, stumping for his tax cut yesterday in Indianapolis, said he would not raise taxes to balance the budget. The budget deficit must be addressed by holding down spending, he said.
“There needs to be fiscal sanity in Washington,” Bush told about 7,500 seniors, military personnel and supporters.
Well said, Mr. President. Let’s start with you.
