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Tuesday, June 07, 2011

Bush Tax Cuts are a 10 Year Economic Disaster

Republicans aren't serious about debt reduction. By now, this should be obvious. We're told that Paul Ryan's Medicare-slaying plan is serious, as well as courageous, but the truth is that it's neither. It's silly and it involves the nation hiding its head in the sand. We've fought two wars, largely off-budget, and engaged in the biggest failure of economic policy since Hoover's performance before the Depression. Republicans shoveled money into a hole for eight years, yet we're supposed to believe that Medicare is our big problem. In 2010, our military spending made up nearly half of all world military spending combined, yet we're supposed to believe our problem is that we spend too much on grandma's heart medication.

It wasn't that long ago that I put up this graph, but let's look at it again:

Bush tax cuts the main driver of current and future deficits

The Bush tax cuts came with a lot of promises. We would grow our way out of deficits. Kind of looks like we didn't. Deficits are mindblowing and our economy is a fragile wreck in recovery. As I said the last time I posted that graphic, by every measure and on every promise, the Bush tax cuts failed to deliver.


Which is why it was no surprise the Center for American Progress' Pat Garofalo post a report yesterday spells out the ten years of failure that have been the Bush tax cuts.

10 years ago [today], the first of the Bush tax cuts was enacted. That 2001 tax cut was followed up by a second tax cut in 2003, passed after Vice-President Dick Cheney reportedly asserted that "deficits don’t matter." The tax cuts were sold as necessary economic stimulus that would boost job creation and a moribund economy. "Tax relief will create new jobs, tax relief will generate new wealth, and tax relief will open new opportunities," Bush said on April 16, 2001 as he was pushing for the passage of the first tax cut. Two years later he said, "These tax reductions will bring real and immediate benefits to middle-income Americans... By speeding up the income tax cuts, we will speed up economic recovery and the pace of job creation." Bush called the 2001 tax cut, "a victory for fairness and a vote for economic growth." Then-Speaker of the House Dennis Hastert (R-IL) said that the cuts were necessary to "spur the economy on." And up through 2008, Bush was still convinced that his tax cuts had been good for the economy. "I think when people take a look back at this moment in our economic history, they'll recognize tax cuts work. They have made a difference," Bush said. However, the record of the Bush tax cuts is undeniable: their enactment coincided with the weakest economic expansion of the post-war period, blowing up the national deficit and debt, while not bringing any of the promised gains.

Yet Republicans use arguments that assume that the tax cuts were a tremendous success. For example, we're told that if we do away with tax cuts for the top wage earners and corporations, then job growth will suffer. But there is no time in history when job growth wasn't better with higher taxation. And what is the logic here anyway? If we raise taxes then businesses won't be able to afford to hire people, as if hiring is just going gangbusters now. They've got the tax cut, it's doing nothing, and hiring was better when taxes were higher.

The fact is that the Bush tax cuts represent the Republicans' "starve the beast" strategy. Basically, this involves spending like there's no tomorrow for a period, then suddenly "discovering" that government can't afford basic services. So you spend idiotic amounts of money on military hardware no one is ever going to use, you cut taxes to the point that revenues are nearly nonexistent, then you say that "socialist" programs like Medicare, Medicaid, and Social Security are the problem. Can't afford these luxuries anymore, but we can afford those moronic tax cuts. If "I want to cut Medicare" is a politically suicidal campaign slogan, then create a situation where you can argue that we have to cut Medicare.

So, while the Bush tax cuts have been an economic train wreck, they've been tremendously successful from a strategic standpoint. It's one thing to put someone out on a ledge and give them a shove, but it's another to create a situation where you might convince them to jump.


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