Bush’s Weird Tax Cut

George W. Bush
George W. Bush; drawing by David Levine


The tax bill is the proudest achievement of George W. Bush’s first six months in office, and it could turn out to be the most important legislation of his entire presidential term—but in ways he didn’t intend. In several respects, the bill typified Bush’s approach to the presidency. The tax bill was based on conservative ideology: not only did it offer the largest rate breaks to the richest people, but it had the explicit purpose of reducing the activities of the federal government. Bush made much of this in the presidential campaign, saying that if the money wasn’t given back to the people, “the politicians in Washington will spend it.” But the harsh intentions behind his tax bill were blurred by his talk about “compassionate conservatism,” his appearances with black children, and the like. Few in Washington were prepared for the determination with which he pursued his tax bill once he took office. He kept adding to the justifications for it: as the economy worsened he said it would help the economy; later he said it would help people hit by rising energy costs.

Bush’s perseverance with the tax bill was typical of the administration’s bulldozing approach to government: pick a few goals and push them and keep pushing them—without showing much concern for how the policy actually turns out, or what its consequences may be. (A Republican senator well disposed toward Bush said to me this spring, “He wants his bills too badly.”) Further, for all his talk of bipartisanship, the administration rushed its $1.6 trillion tax cut (the actual cost was higher) through the House when it thought it had the votes—without regard even to conservative Democrats whose support it might need on other matters. This action, in early March, set off the very partisanship Bush had said he wanted to end.

Bush chose the constituency for his tax bill carefully. The Bush administration is thought, with good reason, to be particularly sympathetic to large corporations and Wall Street. Big business generally favored the Republican Party in 2000, giving it 59 percent of its contributions, or $496 million. The oil and gas industry gave Bush 78 percent of its donations, and the pharmaceutical industry 68 percent. But big business was not the beneficiary of the tax bill. In designing it, Bush and his advisers were appealing to two segments of the party whose backing he needed and craved, both to get elected and to govern. One, whose influence is widely underestimated, but which provides activists and votes, was small business; the other consisted of the leaders and organizations of the Republican right.

Lobbyists for large companies have complained, with reason, that their clients got precious little out of the Bush administration’s tax bill. This is not to say that corporate America has been hurt by the Bush administration. Some companies, such as the extractive industries, made out…

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