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Forum Post: Why America Is Going To Miss The Bush Tax Cuts

Posted 1 year ago on Dec. 13, 2012, 8:41 p.m. EST by MarkKevin (-46)
This content is user submitted and not an official statement

Why America Is Going To Miss The Bush Tax Cuts

Peter Ferrara, Dec 6, 2012

President Obama seems to have a strategy to terminate all of the Bush tax cuts, not just those for “the rich,” as he has been saying since 2008. He is offering the Republicans exactly zero concessions in the “fiscal cliff” negotiations. No spending cuts, no entitlement reform, no compromise on the rates. It is entirely my way or the highway, and if the Republicans refuse to do everything exactly as he demands, he will let the Bush tax cuts expire entirely, for the middle class and working people as well as the upper incomes, and blame the Republicans for refusing to go along with him, and for the economic results.

It is a cynical game worthy of an undeveloped, third world country, not the United States of America. But this is just one more reason, with many more to come, for the American people to regret the mistake they made on Election Day.

Because so many major media institutions, like the New York Times and the Washington Post, have been so duplicitous and dishonest in discussing the Bush tax cuts, most Americans don’t know much about them, even though they have been living with them for 10 years or more now. Indeed, most of what they think they know is not true. But the American people will understand them better, when they see what life is like without them.

President Bush and his Congressional Republican majorities at the time cut taxes for everyone in the 2001 and 2003 tax cuts. Indeed, they cut more for lower and middle income taxpayers than they did for “the rich,” as Obama calls the nation’s job creators, investors, and successful small businesses. The top tax rate was cut by only 13%, while the lowest rate was cut by one-third, 33%.

According to official IRS data, the top 1% of income earners paid $84 billion more in federal income taxes in 2007 than in 2000 before the Bush tax cuts were passed, 23% more. The share of total federal income taxes paid by the top 1% rose from 37% in 2000, before the Bush tax cuts, to 40% in 2007, after the tax cuts.

In contrast, the bottom half of income earners paid $6 billion less in federal income taxes in 2007 than in 2000, a decline of 16%. The share of federal income taxes paid by the bottom 50% declined from 3.9% in 2000 to 2.9% in 2007.

The Bush tax cuts also included a doubling of the child tax credit from $500 per child to $1,000 per child. Because of that, and the 33% cut in the bottom tax rate, nearly 8 million more people dropped off the federal income tax rolls entirely, paying zero federal income taxes. Indeed, under the Bush tax cuts, the bottom 40% of all income earners not only paid no federal income taxes, as a group on net. By 2009, they were being paid cash by the IRS equal to 10% of all federal income taxes.

These Bush tax cuts did not explode the deficit, as Obama and his echo chamber have alleged. By 2007, the deficit was down to $160 billion, less than 15% of Obama’s deficits today. Total federal revenues soared from $793.7 billion in 2003, when the last of the Bush tax cuts were enacted, to $1.16 trillion in 2007, a 47% increase. Capital gains revenues had doubled by 2005, despite the 25% capital gains rate cut adopted in 2003. Federal revenues rose to 18.5% of GDP by 2007, above the long term, postwar, historical average over the prior 60 years. CBO was projecting surpluses to return indefinitely in 2012 through the end of its projection period in 2018.

Bush did increase federal spending as a percent of GDP by one-seventh, erasing the federal spending cuts enacted by the Republican Congressional majorities in the 1990s. But even with that, deficits during the Bush years averaged just 2% of GDP, one-third less than the average over the prior 50 years. President Obama’s deficits have averaged 5 times as much, at 9.1% of GDP.

The proof is in the pudding over the Bush tax cuts. They were followed by a record 52 straight months of job creation, producing 8 million new jobs, with the unemployment rate falling to 4.4%. Business investment spending, which had declined for 9 straight quarters, reversed and increased 6.7% per quarter, producing all those new jobs.

Because of that increased investment, labor productivity soared by 2.5% annually from 2003 to 2007, higher than the averages of the 1970s, 1980s, and 1990s. As a result, real after tax income per capita increased by more than 11%.

Manufacturing output soared to its highest level in 20 years. The stock market revived, creating almost $7 trillion in new shareholder wealth. From 2003 to 2007, the S&P 500 almost doubled. After the Bush tax cuts started in 2001, quickly ending the 2001 recession, the economy continued to grow for another 73 months. From 2000 to 2007, real GDP grew by more than 17%, meaning an additional $2.1 trillion for the American people.

This was mostly the opposite of what President Obama has produced, with his neo-Marxist Obamanomics, particularly unemployment more than twice as high, declining middle class incomes, soaring poverty, weak job growth, stagnant stock market values, collapsing business investment, and negligible growth in GDP.

Of course, the Bush tax cut boom was ended by the 2008 financial crisis. But as discussed in many previous columns, that was caused by the excessive overregulation of President Clinton’s home ownership promotion policies, creating the subprime mortgage market and the housing bubble, and by President Bush’s cheap dollar monetary policies. Obama’s foolish argument that the Bush tax cuts caused the 2008-2009 recession is so dishonest that abusive propaganda alone should disqualify him from office.

Obama’s gleeful termination of the Bush tax cuts will produce just the opposite results of those tax cuts. The combination of all the tax rate increases, along with Obama’s abusive overregulation, and the Fed’s continued mischief, will throw the economy back into recession next year. Unemployment will soar back into double digits, breaking the post depression record of 10.8%. The deficit will soar to over $2 trillion, setting new all time world records. The national debt as a percent of GDP will gallop past Greece.

Middle class incomes will plummet further. Poverty will soar to new all time records.

We can’t afford the Bush tax cuts, as Obama says? We can’t afford to terminate them. Over the past 45 years, every time the capital gains tax rate has been increased, capital gains revenues have declined rather than increased. Obama’s nearly 60% increase in that rate will have the same effect. After the Bush cut in taxes on dividends, dividends paid soared, and so did taxes paid on those dividends. Obama’s near tripling of that tax will have the opposite effect as well. Indeed, if the economy declines back into renewed recession, total federal revenues will decline rather than increase.

Obama’s ploy of blaming all of this on the Republicans will not work this time. The public knows the Bush tax cuts were adopted into law by the Republicans, with complete Republican control of Congress and the White House at the time. It will be too obvious that it took President Obama and his new neo-Marxist Democrat Party to let them expire.

Enjoy the new Obama recession. You and your neighbors voted for it.

http://www.forbes.com/sites/peterferrara/2012/12/06/why-america-is-going-to-miss-the-bush-tax-cuts/

2 Comments

2 Comments


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[-] 2 points by cJessgo (729) from Port Jervis, PA 1 year ago

I never noticed any tax relief for Bush on my paystub.Then again I never worked on wall st. I am not a fan of the current white house occupant,But lets face it the last guy was the all time worst in my long life.

[-] -1 points by SingleVoice (158) 1 year ago

This is all true and anyone with a brain can understand how and why these cuts worked and actually increased revenues to the Federal gov't. Tax cuts always increase revenue to the gov't and increase job growth because it frees up money in the private sector to be spent on goods, services and investments.

The problem is that the Marxists now own the media, the schools & academia and now the white house and the senate. The propaganda machine has been at work for many years and decades and now there is no alternative voices in the mainstream. Alternative voices and opposing opinions are demonized and silenced thru intimidation or whatever means necessary.

When people hear the same lies over and over again, they start to believe the lies even when it defies logic. That's what is being fed to America, lies and more lies and the lemmings regurgitate it without question.

The more sinister side of all this is that the further downturn of the economy that's coming is intentional. People "must be made to feel so frustrated, so defeated, so lost, so futureless in the prevailing system that they are willing to let go of the past and chance the future." (Dostoyevsky said and Alinsky followed). This is why Obama and his army are killing the economy. As they kill the economy and drive more people to government subsidy and dependence, they accrue more power and take more liberty from the people they claim to want to help. Obama does indeed want the middle class to suffer but he must be sure to direct the blame elsewhere so that he can come in and "save the day" with more gov't handouts in exchange for less liberty. The more power any gov't has the less power and freedom the people have.

This agenda is what will fundamentally change America as Obama promised. He just didn't say how he wanted to fundamentally change it. Some of us knew what he meant. I think it's obvious now that he wants to be dictator as he keeps trampling the constitution with Executive Orders that are illegal and bypass congress and he keeps giving up more of our sovereignty to the UN. I think he will try to run for a third term with an executive order and if that doesn't work, he'll become UN Prez so he can run the world after he's punished America for all her "bad behavior" and given the UN all of our sovereignty. One world gov't run by King Obama. Then he can really punish America for all her past sins as he likes to tell us and the world.