Forget all the political piffle about Democrats taking over the U.S. Senate.
It means little.
Try to ignore, if you can, all the news anchors and political analysts as they prattle on about which senior senator is about to claim which committee chairmanship.
The hot air only signifies that, once again, the Potomac pack has missed the story.
And what a story. Because last weekend, just when it looked like the country- club wing of the Republican Party was about to be denied the one thing it really wanted from a Bush presidency, just when Sen. James Jeffords of Vermont jumped ship in the name of moderation to shift the balance of power, Democrats inexplicably and inexcusably surrendered on the single most important issue before Congress, and before the nation–repeal of the inheritance tax.
Perhaps soon-to-be Senate Majority Leader Tom Daschle was in a hurry to measure drapes for his new office. Perhaps he, and the rest of the Democratic leaders, couldn’t wait to dash off to Memorial Day observances bearing news of $600 refund checks for “working families.”
For whatever reason, Daschle and his so-called leadership team sat and watched a week ago as a dozen Democratic senators voted for repeal and another six sat on their hands. As a result, the nation is about to get a 10-year, $1.35 trillion tax cut that will, in time, change dramatically the nature of American society. How? Think 18th Century monarchist France. Think Louis XVI and his lady, Marie “Let them eat cake” Antoinette. Think about a new American aristocracy of limitless and inherited wealth. That’s what Congress voted for last weekend.
Or did you think the Bush tax cut was about ending the marriage penalty? Or being able to put more money in your Individual Retirement Account?
If you did, the joke’s on you.
Oh, there were some sweeteners all right. The gradual phase-up of IRA and 401(k) contribution limits was overdue. Lowering the lowest rate to 10 percent on the working poor was a step in the right direction. Raising the child tax credit and making some college tuition deductible were harmless enough. So was replacing the marriage penalty with a “singles” penalty, though it mainly shows once more how the now-married Baby Boomers always get what we want.
Those changes were sops for saps. Most of the tax relief will be going to the top 1 percent of earners, who make more than $373,000 a year. Once the phase-in is complete, they’ll get enough every year to buy a Lexus while the average wage slave gets enough to buy a muffler for the mini-van. Reduction of the top marginal tax rate from 38.6 percent to 35 percent will cost the Treasury a bundle. Then again, we’re told the high rollers will spend or invest their tax savings in such a way that it will trickle down to the rest of us. Then we can buy our cake.
Lowering the top tax rates, though, wasn’t the worst of it. No, the worst of it is the elimination, by 2010, of the inheritance tax. This, my friends, is what the entire tax-cut exercise has been about from Day 1. The fabulously wealthy hate the inheritance tax. Of course they do. The top rate, 55 percent, is too high. And the amount exempted, now $650,000, is too low.
But that last problem was an opportunity for the very rich. It allowed them, and their paid-for political representatives, to claim the “death tax” was destroying family farms and small businesses. So elimination of estate taxes became an upper-middle-class crusade, even though their problems could have been fixed by lowering the rate and raising the exemption to $3 million . . . or even $5 million. But that kind of low-end relief barely helps the very rich. The fortunate few–America’s 50,000 or so who count their worth in eight figures or more–needed total elimination of the tax. And last week, their kind of president got it for them. And just in the nick of time, because President Bush was about to lose his Senate majority.
What elimination of estate taxes will mean for the future of big-time philanthropy is anybody’s guess. My guess is that the very rich, once they get the choice, will choose to endow “junior” rather than their alma mater or their local hospital or orchestra.
What this means for society in general seems more clear. We will cultivate an aristocracy of power-wielding wealth not seen since the imposition of a graduated income tax in 1913. And in the absence of campaign-finance reform, Congress will more and more resemble a House of Lords.
So congratulations to George W. Bush and the people behind his presidency. They have fulfilled their wildest dream at what should have been their moment of defeat.
Oh, and congratulations to Sen. Daschle on his new, bigger office. Perhaps he can prevent oil drilling in delicate parts of Alaska or roll back arsenic limits in drinking water. The Potomac pack will be impressed.
As for the rest of us, pass the cake.
