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The Bush administration is trying to rally a resurgence of Reagan loving for their own benefit. I like the former prez too, but it's laughable how republicans want to make you believe Reagan's economic plans were superior to Clinton's. Yeah, Reagan looked presidential, had great presence in front of the American people and could communicate with them in ways that were both surprising and effective. But his economic plans were better? Hah! In every measure of economic success that I know of the Clinton years were more prosperous. Republicans disagree.

Bushies' new tax plan is a rehashing of Reagan econmics. The Republicans are pushing a similar increasing deficit, increasing defense spending, decreasing social benefits budget and tax plan as was implemented in the Reagan administration. Admittedly, I think running a large deficit in the current economy is both necessary and prudent, but it should be done right. It should follow a new round of Keynesianism that would get government to invest where industry isn't and thereby increasing employment and bolstering growth. It should be targeted at building U.S. infrastructure, getting money to states that are in serious, deep fiscal trouble, and securing social programs like health and low wage housing that are on the brink. Pragmatically, Republicans don't want to help most states because most of them are led by Democratic governors who are required to run balanced budgets (something the federal government isn't constrained to do). "So let the poor in those states suffer - we'll win the next election" Republicans seem to say. Bah Politics.

The most obvious flaw with Bush's tax plan is that the centerpiece shouldn't be the elimination of dividends. It's double taxation Republicans claim; but what isn't? Most people get taxed on income and then pay sales tax. They pay payroll taxes plus income taxes. Why this focus on dividends tax unless you're trying to shore up political support from the wealthy? It makes no economic sense.

Cheney was out defending this plan recently, meaning he was lying through his teeth again: Cheney Returns Fire in Battle on Tax Cuts. "The fact is that 54 million Americans own stocks that pay dividends," he said. "Moreover, 45 percent of all dividend recipients make under $50,000 a year." It's plain evil that he would even say such a thing. Most people do not own individual stocks that pay dividends. They may own them in IRAs or 401K plans, but the dividends you receive in retirement programs are not taxed in the first place. Also just because 45 percent of all dividend recipients make under $50,000 doesn't mean they're going receive the same benefit from the tax plan. I received a grand total of $1.50 in dividend income last year. That would mean a reduction in taxes of about 30 cents. Woo-hoo! Am I one of the 45 percent of dividend recipients? What Cheney's statistics don't tell you is that there's a problem of sample size and degree of benefits. Let's say there are only 100 people receiving taxable dividends out of a thousand and all 55 of the most wealthy will receive significant benefits from the elimination of dividend tax while out of the bottom 945, 45 will receive some benefit, but most likely a very small tax reduction since they hold fewer shares. I mean, short of writing a bill that out right gives millionaires a huge tax break, elimination of dividends tax is the next best thing. How can Cheney even say with a straight face that this isn't targeted toward the wealthy (like himself) and quote irrelevant, misleading statistics to back up his claim?

Brad DeLong says this:
Ah. We are told that the Bush tax cut means that every year "ninety-two million Americans will keep an average of $1,083 more of their own money." But this is not what the average family will receive: think $265 instead. (On the other hand, it is worth $90,000 a year to the average family making more than one million a year.)

Also with some REAL numbers from the Urban Institute - Brookings Institution Tax Policy Center (click image to enlarge):