By Annie Lowrey
Posted Wednesday, June 8, 2011, at 6:56 PM ET
George W. Bush
The massive Bush tax cuts mark their 10th birthday this week. Sadly, despite my best efforts to find something redeeming about them?honest!?there is little to celebrate. By nearly all of the metrics set out by President Bush himself, the cuts were a colossal failure.
In 2001, the Bush administration inherited a few years' worth of budget surpluses, so it decided to cut income tax rates, double the child-care credit, and sharply reduce the levies on investment income. The economy then slowed, even entering a brief recession. As a form of stimulus, the administration doubled down, expanding and hastening the 2001 changes. Bush promised that the tax cuts would do a whole lot more than put money in people's pockets?which, in fact, they did. He said they would "starve the beast," forcing Congress to reduce the size and scope of government. He promised they would increase the prosperity of all Americans. He also vowed: "Tax relief will create new jobs. Tax relief will generate new wealth. And tax relief will open new opportunities."
OK, a pitter-patter of applause for what the tax cuts did do effectively: Cut taxes and reduce overall payments to Uncle Sam. Low-income families benefited from the child-care credit jumping from $500 to $1,000. High-income families benefited from the top marginal rate falling. Billionaires benefited from lightly taxed dividend income. And government receipts, in turn, dropped.
But the benefits mostly accrued to the rich, according to the nonpartisan Tax Policy Center. The think tank reports that between 2001 and 2008, the bottom 80 percent of filers received about 35 percent of the cuts. The top 20 percent received about 65 percent?and the top 1 percent alone claimed 38 percent.
What about the president's claims? Take his pledge that the cuts would spur job growth. To be fair, we'll ignore employment changes during 2008, the year the Great Recession seized the economy. During the 2001 to 2007 business cycle, America's economy enjoyed 52 straight months of job growth. But it was sluggish?in fact, the slowest rate of jobs growth on record since World War II, and just one-fifth the pace of the 1990s.
Then there's wealth. Put simply, the aughts were a decade of income stagnation: The tax cuts failed to bolster most taxpayers' earnings, even before the recession hit. Median real wages actually dropped from 2003 to 2007. Household income from business-cycle peak to business-cycle peak declined for the first time since tracking started in 1967. As documented by my colleague Timothy Noah in his series "The United States of Inequality," this did not hold true for the nation's billionaires and millionaires. Garden-variety high-wage earners saw their income go up. And incomes for the top 1 percent skyrocketed. For some people, obviously, the cuts "generated new wealth," in the president's phrase. But overall, inequality got worse.
That leads to the third metric: Did the cuts "open new opportunities"? It's a vague phrase, but one way to measure it is to look at job growth?and there's nothing to see there. Another way would be to say that the cuts benefited "job creators" (to use the current en vogue phrase), like the nation's start-up businesses. But the number of private-sector jobs created by young companies fell during the Bush administration.
Unfortunately, the tax cuts never translated into robust economic growth, either. Indeed, the aughts saw the worst growth since World War II. From 2001 to 2007, annual GDP growth averaged just 2.4 percent per year, lower than in any other postwar business cycle. The contrast is starker still when judging against the previous decade. In real terms, GDP grew half as much from 2001 to 2010 as from 1991 to 2000.
There is another metric that Bush set out for the tax cuts: Did they succeed in helping to create a smaller government? Again, the answer is no. Events beyond Bush's control necessitated the Afghanistan war. He later decided to invade Iraq, and pushed through unpaid-for domestic expansions of government, like Medicare Part D. Deficits and government spending as a share of GDP grew during the Bush administration.
OK, a final attempt at celebration. Did the tax cuts stimulate the flagging economy in the early aughts? Sort of. Tax cuts give a mild boost to the economy, but not a big one. "After the tax rebates in 2001, 2003, and 2008, households [spent] between 25 and 67 cents more for each dollar of tax cut," William Gale of the Tax Policy Center writes. That makes tax cuts "a relatively weak way to help the economy compared to increases in government purchases, for which each dollar of increased deficit turns into an additional dollar of spending."
So, to recap: The Bush tax cuts were followed by low GDP growth, negative median wage growth, and little job growth. Even before the Great Recession, growth in the Bush business cycle was the weakest since World War II. And the cuts cost about $2.6 trillion between 2001 and 2010, according to the Economic Policy Institute?adding to a debt future generations of taxpayers will pay for, plus interest.
By Bush's own metrics, then, the tax cuts were a failure. But perhaps that is because Bush chose such absurd metrics and made such silly promises about tax cuts' economic omnipotence in the first place. To state the obvious, tax cuts are not magic. They can help a strong economy get stronger or help a weak economy pick up some steam. They also have a direct impact on the government budget. But they cannot goose employers into adding millions of jobs, pay for themselves, and arrest the growth of government, all while delivering everyone cupcakes. So perhaps the best we can say about the Bush tax cuts is that they did exactly what we should have expected them to do.
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I'll believe corporations are persons when Texas executes one.: LBJ's Ghost
but yet the republicans want to double down again. there has to be a balance between supply and demand for an economy to work, right now we have focused on pushing the supply side with so many incentives that it's in no way shape or form near limiting economic growth, what is limiting it is entirely demand side.
no matter how many breaks we give businesses or how low we lower taxes for the rich they aren't going to produce goods if there is no demand, we need to help out the average worker, not the wealthiest as we have been doing for decades....
How does one tax a business without it just passing it on to the consumer or the stockholders? The government must cut spending but do the math. It is currently spending 1.667 times its revenue. In order to pay a half trillion per year so as to pay off the debt in 50 years or so would require spending some 23 per cent less than revenue, or an actual spending cut of 1.94 trillion which ain't gonna happen with either party in control.
Do we really believe rich people owe us a living without us working for it? What have we become? Google "Beer Drinker's Parable".
Because a president can spend more than any other in American history - more than bush did in his entire 8 years - and his followers rationalize it by saying 'Nuh uh! It was all the other guys fault!'. Mid-terms weren't enough proof I guess - lucky for us, next years election year!
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no matter how many breaks we give businesses or how low we lower taxes for the rich they aren't going to produce goods if there is no demand, we need to help out the average worker, not the wealthiest as we have been doing for decades....
It's like throwing money at a tsunami to give tax breaks to those who have already demonstrated they're unwilling to invest it in an iffy economy. Each Sunday I watch panel discussions about why people are sitting on wealth rather than chance a market with so many unknowns.
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I'll believe corporations are persons when Texas executes one.: LBJ's Ghost
How does one tax a business without it just passing it on to the consumer or the stockholders? The government must cut spending but do the math. It is currently spending 1.667 times its revenue. In order to pay a half trillion per year so as to pay off the debt in 50 years or so would require spending some 23 per cent less than revenue, or an actual spending cut of 1.94 trillion which ain't gonna happen with either party in control.
Part B:
Quote:
Do we really believe rich people owe us a living without us working for it? What have we become? Google "Beer Drinker's Parable".
What does A have to do with B?
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I'll believe corporations are persons when Texas executes one.: LBJ's Ghost
Because a president can spend more than any other in American history - more than bush did in his entire 8 years - and his followers rationalize it by saying 'Nuh uh! It was all the other guys fault!'. Mid-terms weren't enough proof I guess - lucky for us, next years election year!
No one is rationalizing FACTS. Bush gave us a BUSH RECESSION he created by blowing the SURPLUS handed to him by Clinton. He did it so completely that before leaving office Bush began Tarp in an initial effort to stem the BUSH RECESSION. Under Obama these same steps were necessarily broadened to other large corporate entities like Chrysler & GM. Those companies and over a million jobs survive today because Obama saved them.
In the case of this RECESSION it was the other guy's fault and repeating the BUSH ERROR of giving BIG OIL tax breaks when they're best positioned to pay their own way is ludicrous. Why not cut up and package the hens and have them delivered to the Fox's house to save the poor Fox a trip to the hen house?
Were you unaware that FDR did balance the budget during the Depression and it resulted in the worst year of the Depression? Bernanke is saying that moving too fast cutting cost can result in a deepened RECESSION.
These are FACTS, not some recycled hash from the right.
BUSH = DEPRESSION/RECESSION
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I'll believe corporations are persons when Texas executes one.: LBJ's Ghost
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