Economists Disagree With Bush On Relationship Between Massive Tax Cuts And ... Cuts In Deficit, Economic Growth ...
President Bush and Republicans up for re-election have been touting lower-than-expected deficit projections, claiming that this is proof that Bush's massive tax cuts are successfully stimulating the economy.
But economists disagree. And not economists from some liberal think tank, but from the non-partisan Congressional Budget Office.
An analysis of Treasury data prepared last month by the Congressional Research Service estimates that economic growth fueled by the cuts is likely to generate revenue worth about 7 percent of the total cost of the cuts.
"Federal revenue is lower today than it would have been without the tax cuts. There's really no dispute among economists about that," Alan Viard, a former Bush White House economist now at the nonpartisan American Enterprise Institute, told the Washington Post.
And even the Department of Treasury admits that the tax cuts haven't paid for themselves. "As a matter of principle, we do not think tax cuts pay for themselves," Robert Carroll, deputy assistant Treasury secretary for tax analysis, told the Post.
The entire Republican argument is disingenous. The deficit for the year ending Sept. 30 was $248 billion, compared with $413 billion for the previous year.
But is this a great accomplishment? Let's not forget that when the Bush team came into office, it inherited a budget that was projected to create surpluses of perhaps several hundred billion. Yes, the Bush team had to deal with the economic shock of 9/11 and the subsequent war in Afghanistan. But the Bush team chose to move forward with massive tax cuts after 9/11, when others suggested scaling back the tax cuts plans -- both to follow the concept of "shared sacrifice," and to not exacerbate the likelihood of massive deficits.
How else can we tell that the massive Bush-era tax cuts haven't stimulated the economy? From the words of Labor Secretary Elaine Chao.
Chao has said that the economy has only produced 140,000 jobs/month during the strongest period of the Bush-era economy. Economists suggest that a growing economy needs to create 150,000 jobs/month just to match population growth. By comparison, job growth during the eight years of the Clinton presidency was 236,000/month, according to the Bureau of Labor Statistics.
Chao has touted a 6% jump over five years in "overall compensation." That means that compensation is growing at a pace of 1.2% per year. With inflation at about 3% per year, that's not "growth." That's "not keeping up with inflation."
Furthermore, current compensation "growth" -- putrid as it is -- does not keep up with the compensation growth of the past seven economic growth periods.
The facts at hand -- again, not from some liberal think tank, but from non-partisan and Bush Administration sources -- won't stop Bush and Republicans seeking re-election from touting the great job they've done with the economy.
It's a mirage. It's up to Democrats to set the record straight.