Bush’s ‘Tax Cut Economy’

September 27, 2010

In 2001 the Bush tax cuts were passed through a reconciliation vote. (Remember that word “reconciliation”. The Republicans made such a fuss over it during the health care reform wars, and the public ‘jumped on board’. Hypocrites!) Anyway, Bush claimed the $1.35 trillion (in 2001 dollars) tax cuts would be “a cure-all for all the nations economic problems”, and there would be massive job creations that would create revenues. Oooops! I guess he was wrong — again! Bush’s tax policies “fostered the weakest jobs and income growth since 1945”.

Bush signed another tax cut bill in 2003 which he claimed was a “little-bitty tax cut”. I suppose you could use that term if you consider $350 billion-plus a little-bitty thing. This signing was ironic in that it came just one day after Bush signed a bill allowing the government to borrow as much as $7.4 trillion — with no comment or ceremony — which was an increase of $984 billion to pay for the Bush tax cuts. You got to wonder why he didn’t want to make mention of the increase!

Bush had promised to sign a tax cut bill for every year he was in office, and he damn near fulfilled that promise. Democrat Senator Tom Daschle said in response to the 2001 tax cuts “I just know that at some point that reality is going to come crashing down on all of us and we’re going to have to deal with it”. But Daschle was written off as “just another Democrat — you know one of those “tax and spend” Democrats versus the “borrow and spend” Republicans. Well, here we are today — $12 trillion in debt (and growing), and the overall Bush tax cuts have contributed an estimated $3 trillion to that number.

So how did the Bush tax cuts work out for the economy? David Cay Johnston tells us.

• Total income was $2.74 trillion less during the eight Bush years than if incomes had stayed at 2000 levels.
• In only two years was total income up, but even when those years are combined they exceed the declines in only one of the other six years.
• Average taxpayer income was down $3,512, or 5.7 percent, in 2008 compared with 2000, President Bush’s own benchmark year for his promises of prosperity through tax cuts.
• Had incomes stayed at 2000 levels, the average taxpayer would have earned almost $21,000 more over those eight years. That’s almost $50 per week.
• From 2003 through 2007, total income was down $951 billion.
• In only two of the eight Bush years, 2006 and 2007, were average incomes higher than in 2000, but the gains were highly concentrated at the top [italic added]. Of the total increase in income in 2007 over that in 2005, nearly 30 percent went to taxpayers who made $1 million or more.
• In 2008 the average taxpayer made $58,000. That was $5,100 less than in 2007, a decline of 8.1 percent.
• The number of taxpayers reporting any wages in 2008 was 1.26 million fewer than in 2007.
• The average for all jobless workers was 33.6 weeks of unemployment, the equivalent of going from New Year’s Day through August 23 without a paycheck.
• The number of taxpayers with incomes below $100,000 with any wage income fell in 2008 by 1.8 million.
• Those reporting negative incomes quadrupled from less than 600,000 in 2000 to nearly 2.5 million in 2008.
• The number of people reporting incomes of $200,000 or more but legally paying no federal income taxes skyrocketed in the second Bush term.
• In 2008 nearly 1 in every 200 high-income taxpayers paid no federal income tax, up from about 1 in 1,500 in 1998.
• The share of high incomes that were untaxed increased more than sevenfold to one dollar of every $166.
• One of every eight dollars of the tax cuts went to the 1 in 1,000 taxpayers in the top tenth of 1 percent, the annual threshold for which was in the $2 million range throughout the last administration.
• The tax cuts did not spur investment. Job growth in the George W. Bush years was one-seventh that of the Clinton years.
• The number of Americans in poverty, as officially measured, hit a 16-year high last year of 43.6 million.
• In the two years since 2008, the cuts’ total cost grew to $2.3 trillion.

“This is economic madness. It is policy divorced from empirical evidence. It is insanity because the policies are illusory and delusional. The evidence is in, and it shows beyond a shadow of a reasonable doubt that the 2001 and 2003 tax cuts failed to achieve the promised goals. So why in the world is anyone giving any credence to the insistence by Republican leaders that tax cuts, more tax cuts, and deeper tax cuts are the remedy to our economic woes? The Republican leadership is like the doctors who believed bleeding cured the sick. When physicians bled George Washington, he got worse, so they increased the treatment until they bled him to death.”

In typical Republican fashion, they’re now blaming the Democrats for the Bush tax cuts.

In 2001 Federal Reserve Chairman Alan Greenspan (Republican) “gave his broadest endorsement of tax cuts to date”. Ten years later he’s regretting it and says “let all of Bush’s tax cuts expire”. His positions, then and now, is a small sampling of how wrong the cuts were and what should be done now. So fear; not “fear not”! The Republicans pledge more of the same, and they will probably be voted into power. And not only will the bleeding continue, they will open up gushing arteries.