April 22, 2003 - The pundits are reporting that all the President’s Men are planning on capitalizing the image of a winner in the Iraqi campaign to push the Bush tax cut through Congress. The University of Illinois lost its successful basketball coach to a Kansas deal that will pay Bill Self a reported $1.4M per year, a good third of it tax sheltered deferred income. On the surface these two facts seem to have little to do with the other, but bear with me just a moment.

The two center-pieces of the Bush tax cut program, repackaged as a plan to simulate economic recovery and job growths from the recession that the Administration say did not happen, is a cut in the marginal tax rate on the highest personal incomes from 38% to 35% coupled with eliminating dividends received by investors from the definition of taxable income elimination even the 35% tax on that money. That means for Bill Self a benefit of about $30,000 a year for the 5 year life of his contract in addition to the half million annual increase he got for jumping ship at Illinois.

Now there is something wrong with a system where a fellow coaching an amateur sports team gets paid about 10 times as much as a Member of Congress; about 5 times as much as General Tommy Franks and a little more than three times as much as the President of the United States. Consider that what Bill Self will do to “earn” his money is to direct 15 purported student-athletes for 13 weeks. Now compare that to the literally life and death decisions that the others I mentioned are called upon to make 24/7.

Let’s take the President as an example of what the tax-cut will mean in the real world, the world outside of collegiate sports. In round figures the President reported a little over $800K in income last year, half of it in salary and the rest in investment income. Where the coach gets a 3% tax break the President’s tax break if the proposal passes is closer to a 50% cut in his taxes assuming that the lion’s share of that investment income is in dividends from capital stocks held in his blind trust. Now, neither the President nor the Coach is going hungry or without food or shelter because of the present Federal taxes that they pay.

That brings me to Tommy Frank and the soldiers that he led on the Roads to Kabul and Baghdad. Those tax dollars that the first tax cut turned away and the ones that the new proposal will eliminate won’t be in the Treasury to pay for the high cost of fighting and winning and then fixing the things that Tommy and his soldiers necessarily broke along the way. That’s going to have to be done with borrowed money – money that our kids and grandkids are going to have to repay. While we, and the Congress, have had our attention fixed on Baghdad, the all the President’s Men have been using that period of Mass Distraction to prepare way to ram through the tax-cut this spring. Maybe Bill Self and the President are in the same business.

(more tomorrow!)