"I Call You My Base"

President Bush's new budget will top $3 trillion. It envisions massive deficits for fiscal years 2008 and 2009 -- nearly matching the record in 2004, when the federal budget went $412 billion into the hole.

The average American might properly ask, "Shouldn't we at least have something to show for all this?" Even the basics are missing -- for example, health coverage for all children, a serious effort against global warming, bridges that don't fall down. Where has the money gone?

David Cay Johnston provides some answers in his angry and brilliant book, "Free Lunch." An ace investigative reporter, Johnston explains: "From those leaves in the park to textbooks to highway bridge maintenance to food safety inspections, money is dwindling because so much has been diverted to the already rich through giveaways, tax breaks and a host of subsidies that range from the explicit to the deeply hidden."

These diversions started in the Reagan years, according to Johnston, and Democrats have played their part. But the massive transfer of national wealth to the tippy-top became religion in the Bush administration.

Johnston recalls Bush's famous remarks to a white-tie crowd at the Waldorf-Astoria during his 2000 campaign. Referring to his audience as the "haves and have mores," he said that "some people call you the elite. I call you my base."

Bush gave the "base" some very big tax cuts in 2001 and 2003. The cuts were supposed to boost the economy and probably helped, but they never generated enough revenue to pay for themselves. When higher collections helped lower the 2005 and 2006 deficits, the administration credited tax-cutting magic. Most economists disagreed, citing an upswing in the business cycle, bolstered by a housing bubble.

And contrary to conservative legend, the Bush tax "reforms" did not raise the overall income-tax burden of the very rich. The administration cleverly claims that the share paid by the top 40 percent is higher than it was in 2000 -- which is true. It neglects to add that families at the tiny pinnacle -- the top tenth of 1 percent (who made at least $1.7 million in 2005) -- have seen their tax burdens decline significantly. In 2005, this group of 300,000 men, women and children made nearly as much money as all 150 million Americans in the lower half.

So the high earners below this super-elite accounted for the entire heavier burden of the top 40 percent. These are the members of the upper middle class -- the doctors, lawyers and businesspeople who have to work for their money.

As Johnston brutally documents, the free-market posturing of the Bush administration is a total sham. The government has become the enricher of the already rich, not the other way around.

For the connected, government gives away public land at deep discounts. It jiggers the tax code to make moving factories to China more profitable. It undoes safety regulations that subtract from the bottom line. It weakens consumer protections, letting financial institutions prey on the unsophisticated and the not-very-bright. In fine-print legislation, it shifts risk from the corporate managers onto investors and makes the taxpayer cover their mistakes. There's a reason why the number of registered lobbyists in Washington has more than doubled to 35,000 since Bush took office.

The rising cost of Medicare is troubling and must be addressed. But isn't it interesting that Bush sees this middle-class entitlement as the budgetary outrage that needs his immediate attention? His budget would make deep cuts in the Centers for Disease Control -- and eliminate a $301 million program that trains pediatricians at children's teaching hospitals.

That's stuff for the ordinary folks. The have-mores will do just fine.

Froma Harrop is a nationally syndicated columnist based at The Providence Journal, in Rhode Island. Harrop has written for such diverse publications as The New York Times, Harper's Bazaar and Institutional Investor.

Views expressed in this column are those of the author, not those of Rasmussen Reports.

COPYRIGHT 2008 THE PROVIDENCE JOURNAL CO.

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