As is often the case with this administration, there are two reasons for doing things. One is the real reason and the other is the ostensible reason.
Bush once said to a smug, well-fed, and well-dressed crowd: "Some call you the rich. I call you my base!" The real reason for these tax cuts is that people making at least a million dollars a year would be sad if they didn't get 42,000 off of next year's tax bill.
The ostensible reason--the one they give the middle class, together with its twenty dollar tax break, is that the 2003 tax cuts jump started the economy. Without this tax cut, they say, the economy will stall and a recession will threaten.
Don't buy it.
Just think back. In 1981 the claim was that the Reagan tax cut would set off an economic boom. But the 1980s had the slowest rate of productivity growth in America of any decade since the Civil War.
In 1993, the claim was that Clinton's tax increases would send the economy into recession. But the rest of the 90s saw the fastest economic growth in America in 30 years.
Yes, the economy has been doing relatively well since 2003. But a stopped clock is right twice a day.
The reasons that the economy has been doing relatively well over the past three years have everything to do with the underlying technological revolution in computers still centered in Silicon Valley. Those computers increase productivity. That increases output, saves money, and boosts corporate profits to record.
The economy is also humming along because of the availability of cheap money thanks to the Federal Reserve. All that cash sloshing around at corporations has improved business executives' confidence.
The good economic news of the past few years has little to do with Bush administration economic policy.
Don't let them trick you: To stave off recession, we don't need to give everyone making more than a million dollars year a $42,000 a year present.