Observations on the world today.

Friday, August 13, 2004

Disappointment Haunted All My Dreams 

It's been a bad news day for the president.
Report Finds Tax Cuts Heavily Favor the Wealthy

According to the new report from the Congressional Budget Office, about two-thirds of the benefits from the tax cuts, enacted in 2001 and 2003, went to households in the top fifth of earnings, with an average income of $203,740.


People in the very top income categories fared better by almost any measure, according to the report. The average after-tax income for people in the top 1 percent of income earners climbed 10.1 percent, while that of those in the middle 20 percent climbed 2.3 percent, and that of those in the bottom fifth only 1.6 percent.

Put another way, people with the top 1 percent of income saw their share of the tax burden drop to 20.1 percent after the tax cuts from 21.9 percent under the old law.


"It's not just that lower-income people are getting smaller benefits,'' Dr. Gale said. "It's also that these tax cuts will eventually have to be paid for with either spending cuts or tax increases, and those are likely to be less progressive than the taxes they are paying now.''

Trade Gap at Record, Producer Prices Tame

The U.S. trade deficit widened much more than expected in June, hitting a record $55.8 billion on the biggest drop in exports in nearly three years and record imports, the government said on Friday.

Separate reports showed producer prices largely under wraps last month and consumer sentiment eroding in August.

Wall Street economists had expected the trade gap to grow, but looked for a deficit of just $47 billion. Instead it jumped 19 percent, the biggest increase in more than five years.

Analysts said the unexpectedly large gap will lead the government to lower its reading of second-quarter economic growth, which it had put at a 3 percent annual rate in a snapshot late last month. Before Friday, economists had been thinking the GDP figure would actually be bumped up.
None of this is good news for America or the world, so it makes me feel strangely guilty enjoying the fact that this cannot be good news for Bush's reelection hopes. I mean, realistically, I know that Bush isn't single-handedly responsible for the widening trade gap, but his policies are at least partially responsible. And I know that Kerry's plan won't change the tax burden on the middle class. But Bush did tout his plan as being one that would fix the economy in miraculous ways, and it hasn't even come close.

So while the news of our deepening economic morass itself actually sickens me, the thought that it will help bring down the miserable failure puts an ironic smile on my face.



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