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Bush's Binge

The War might be the big story of the day, but what unfolded today, with Congress approving a Record $2.27T Budget, is what's going to set the agenda for the upcoming political year.

In order for Bush to get at least half of what he wanted, the Republicans had to drag Cheney in to break a 50-50 tie, but that was only after Snowe received promises from her party's leader that any tax cut bill sent to the White House won't exceed $350 billion.

These kinds of promises are made to be broken. So, here's the tax-cuts that the Republicans will definitely get:

Grassley said he would use the $350 billion to accelerate already scheduled income tax reductions, marriage penalty relief and child tax credit increases. He also plans to allow small businesses to write off more of their new investments.

And here's what Bush seemingly will not get:

The Senate will not have room to include the president's proposal to reduce taxes on corporate dividends unless its cost is offset by increasing taxes or closing tax loopholes.

Whenever you see those spend and borrow bills offset by closing tax loopholes, reach for your wallet. This is another budget buster already in the chute:

The budget is a nonbinding resolution used by Congress to outline tax and spending policy. It projects deficits will peak next year at $385 billion, then decrease gradually until a $10 billion surplus is reached in 2012.

Bush is already at $385 Billion in the hole for this years spending, and it's only got the first phase of the war spending. Next year, he's going over 1/2 a trillion.

It permits the spending controlled by Congress to grow less than 3 percent next year, to $785 billion. More than half that money — $400 billion — will go to defense.

The blueprint also budgets $400 billion for lawmakers to develop a Medicare prescription drug benefit later this year.

More than half toward defense, wow. And who only knows how this $400 billion for a Medicare prescription is going to fallout. This can't have good repercussions in the market. Given a dismal fiscal condidtion heading into the 2004 election, this Rovian gambit for more tax-cuts only made political sense alongside a big dividend cut that was designed to prop up a stagnant stock market. Old money was going to go into dividend producing stocks, for tax-free gains, moving the Dow up toward 10,000 again.

This means (assuming loopholes don't play hide and seek) that the big corporate payoff has again eleuded the big business contributors to the Republican Party. The corporate dividend shelter was the 2003 return of the corporate pay-off that was suppossed to occur after the first tax-cut in 2001, before the Jeffords defection.

Without that tax-cut in the equation, all that remains of the revenue-depletion is a hodge-podge of handouts and giveaways. There's nothing wrong with the tax-cuts that Grassley is proposing, in fact, they are the ones that should have been done to in the 2001 tax-cutting. At this point, they will to do nothing in the short-term except exasperate Bush's borrowing binge mentality even further.

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