The cost this year alone of the Bush tax cuts enacted in 2001 and 2003 comes to $225 billion. In other words, the revenue lost because of tax cuts going through this year without any congressional action would more than pay the costs of Katrina recovery.
Source: E. J. Dionne Jr.
Comments such as Dionne’s are based on the false premise that taxable income is not influenced by tax rates. That is, he and others assume the Laffer curve does not exist. The false belief is that all that is needed to increase revenue is to increase tax rates. In fact, tax revenue is up since the tax cuts. An increase in tax rate will likely reduce tax revenue. That wouldn’t be altogether bad for the Democrats and Dionne. They would be able blame Bush for Iraq, Katrina, and Rita, as well as the economic stagnation resulting from the tax increases. Sounds like a strategy to me.