Perhaps a dose of trickle-down economics will snap you out of it. And that s just the beginning. The Bush plan would phase in tax reductions over the next 5 years, despite the President s argument that a cut is urgently needed to jump-start the economy. Separating the reality from the rhetoric can be hard.
Some analysts point to the large budget surplus as a rationale for lowering taxes.
However, economist Paul Krugman points out that Social Security and Medicare account for about half of the surplus. These programs are funded through payroll taxes, but the Bush plan only focuses on income taxes. Since payroll taxes aren t in the picture, many working families who contribute directly to a sizable part of the surplus won t see the same level of tax relief as wealthier families. Similar cuts in the 1980s led to growing budget deficits and the largest level of peacetime debt in recent U.S. history. Instead of short-term strategies like cutting taxes, investing in the future in areas such as healthcare, education, or childcare could earn bigger returns down the road.