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Killer Facts on Failure of Bush Economic Policies

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Bush tax giveaways:

  • didn’t create jobs (Job losses: 7,796,000 for GOP v. 41,000 for Obama)
  • didn’t create growth
  • put us into debt to give the wealthiest Americans a break at the expense of the middle class

BUSH POLICIES: NO GROWTH, NO JOBS, NO GAINS FOR MIDDLE CLASS

BUSH TAX GIVEAWAYS FOR THE RICH DID NOT CREATE ECONOMIC GROWTH; FROM 2001 TO 2007 ECONOMIC GROWTH AVERAGED 2.3 PERCENT ANNUALLY. “The long-planned 2001 tax reduction took effect during the mild 2001 recession and probably helped make it milder, says Joel Slemrod, founding director of the Office of Tax Policy Research at the University of Michigan’s Ross School of Business. But the cuts weren’t designed as Keynesian energy shots. They were supposed to promote long-term growth by realigning incentives. On that score their legacy is hard to measure because there’s no way to know how the economy would have fared without them. Many companies instituted dividends to take advantage of the tax break, but whether that induced more investment is unclear. What’s indisputable is that deficits grew while the U.S. economy rumbled along in slow gear: Growth averaged 2.3 percent a year from the end of the 2001 recession through December 2007, at which point the economy tumbled into the worst downturn since the Great Depression.” [Business Week, 8/5/10]

BUSH TAX CUTS DID NOT CREATE JOBS: FROM 2001-JUNE 2007 JOBS GREW AT 4.8 PERCENT COMPARED TO 16.2 PERCENT UNDER THE SAME TIME PERIOD UNDER CLINTON. “The economy boasted 132 million jobs in June of 2001, the month that the first of the Bush tax cuts was signed into law. Three years later, in June of 2004, there were just 131.4 million jobs. The economy did not add a single new job during three years under the Bush tax cuts. The next three years were better than the first three as the private sector struggled back to its feet following the first Bush recession. By June of 2007, before the start of the Great Recession, total jobs had grown to 137.7 million. Overall, the six years following the Bush tax cuts saw a 4.8 percent increase in jobs. That’s not nothing, but it’s pretty anemic compared to job growth under President Bill Clinton. President Clinton, after raising taxes in 1993, oversaw an economy that went from 111 million jobs in August of that year (the month Clinton’s budget plan passed, including the increase in taxes) to 129 million jobs six years later—an increase of 16.2 percent, and more than three times better than under the Bush tax cuts.” [Center for American Progress, 7/29/10]

BUSH TAX CUTS DID NOT PRODUCE INCREASE IN REAL INCOME (1.6 PERCENT) COMPARED TO CLINTON POLICIES (14.7 PERCENT). “Real income for the median American household went from $51,356 in 2001 to $52,163 six years later—an increase of just 1.6 percent. Under President Clinton’s tax rates, real median household income went from $45,839 in 1993 to $52,587 in 1999—an increase of 14.7 percent.” [Center for American Progress, 7/29/10]

MAJORITY OF TAX CUTS WENT TO THE TOP FIVE PERCENT OF AMERICANS, MIDDLE CLASS AMERICANS SHARED ONLY RECEIVED 7 PERCENT OF THE BENEFITS. According to Citizens for Tax Justice, in 2010, 52.5 percent of the Bush tax cuts benefited the richest 5 percent of taxpayers. The middle 20 percent of Americans only received seven percent of the benefits. [Citizens for Tax Justice, 9/8/09]

2001 AND 2003 BUSH TAX CUTS THE ‘SINGLE LARGEST CAUSE OF AMERICA’S STRUCTURAL DEFICIT.’ “The ‘Bush tax cuts,’ passed in 2001 and 2003, remain the single largest cause of America’s structural deficit — that is, the deficit not caused by the collapse in tax revenue when the economy goes into recession. The Bush administration inherited budget surpluses from the Clinton administration. What turned these into deficits, even before the recession? There were three fundamental new costs: the tax cuts, the Medicare prescription-drug bill and post-9/11 security spending (including the wars in Iraq and Afghanistan). Of these the tax cuts were by far the largest, adding up to $2.3 trillion over 10 years. According to the Congressional Budget Office, nearly half the cost of all legislation enacted from 2001 to 2007 can be attributed to the tax cuts.” [Zakaria, Washington Post, 8/2/10]

BUSH TAX CUTS – NOT EFFECTIVE ECONOMIC JUMP START, NO HELP FOR SMALL BUSINESS,  INCREASE DEBT

EXTENDING THE BUSH TAX GIVEAWAYS FOR THE RICH WOULD BE THE LEAST EFFECTIVE WAY TO STIMULATE THE ECONOMY. In January 2010, the Congressional Budget Office analyzed the estimated effects of eleven policy options on economic output and employment for 2010-2015. Ranked least effective was extending the tax cuts in 2011. The 11 policies in order of effectiveness:

  • Increasing aid to the unemployed;
  • Cutting employers’ payroll taxes;
  • Cutting employers’ payroll taxes for firms that increase their payroll;
  • Cutting employees’ payroll taxes;
  • Providing an additional one-time Social Security payment;
  • Allowing full or partial expensing of investment costs;
  • Investing in infrastructure;
  • Providing aid to states for purposes other than infrastructure;
  • Providing additional refundable tax credits for lower- and middle-income households in 2011;
  • Extending higher exemption amounts for the Alternative Minimum Tax;
  • Reducing income taxes in 2011. [Congressional Budget Office, January 2010]

MOST SMALL BUSINESSES WOULD GET NO RELIEF IF THE BUSH TAX GIVEAWAYS TO THE RICH WERE EXTENDED. 98 percent of small businesses do not pay income taxes in the highest two income brackets. Only 2 percent of tax returns reporting small business income are filed by taxpayers earning in the top two brackets–individuals earning more than $170,000 and families earning more than $210,000 per year. [Gale, Washington Post, 8/1/10]

CONTINUING BUSH POLICIES, INCLUDING THE BUSH TAX CUTS, WOULD LEAD TO A NATIONAL DEBT 90 PERCENT OF GDP BY 2020. Based on projections by the Congressional Budget Office, Alan Auerbach of the University of California at Berkeley and the Brookings Institution’s William Gale, “even if the economy returns to full employment by 2014 and stays there for the rest of the decade, the continuation of current fiscal policies, including the Bush tax cuts, would lead to a national debt in the range of 90 percent of GDP by 2020. That’s already the highest rate since just after World War II — and Medicare, Medicaid and Social Security aren’t expected to hit their steepest spending increases until after 2020. According to these same projections, the yearly deficit would rise to 6 to 7 percent of GDP by 2020. The Bush tax cuts would account for a significant chunk of this, considering that in each year they are in effect, the revenue lost because of them amounts to nearly 2 percent of GDP.” [Gale, Washington Post, 8/1/10]

2009-2019: BUSH POLICIES OF TAX CUTS AND WARS IN IRAQ AND AFGHANISTAN WILL ACCOUNT FOR ALMOST $7 TRILLION IN DEFICITS. “Just two policies dating from the Bush Administration — tax cuts and the wars in Iraq and Afghanistan — accounted for over $500 billion of the deficit in 2009 and will account for almost $7 trillion in deficits in 2009 through 2019, including the associated debt-service costs.” [CBPP, 6/28/10]

EXTENDING THE BUSH TAX GIVEAWAYS FOR THE RICH COULD ADD ANOTHER $840 BILLION TO THE NATIONAL DEBT. The Center for American Progress estimated that continuing the Bush tax giveaways to the rich—the tax cuts for the wealthiest two percent of Americans—would reduce revenues $690 billion over the next ten years. The Center also projected an additional cost of $140 billion if extending the giveaways were not paid for and simply added to the debt. [Center for American Progress, 7/29/10]

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