The Bush Tax Cuts Turn 10; Let's Look At the Damage They've Caused
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Happy anniversary, Bush tax cuts! Just 10 short years ago, on June 7, 2001, President George W. Bush pushed massive tax cuts through Congress. He promised more economic growth as those tax cuts stimulated spending and job creation, and repeatedly claimed they were so important that they needed to be maintained even in the face of one and then two wars, an unprecedented natural disaster and a massive economic crisis.
Republicans in Congress have backed him up on that the whole way, and a distressing number of Democrats—including the current president, whom you'll recall ran on a promise to roll back the Bush tax cuts for those making over $250,000 a year—have enabled them. So now in 2011 we're still stuck with them, even though there's no proof they ever worked, and increasing proof that they were actually harmful.
We're in a golden age of deficit fear-mongering, even if the Tea Party movement has faded from prominence. The deficit is the excuse on the lips not only of Republicans like Paul Ryan and “libertarians” like Rand Paul but Blue Dog Democrats like Heath Shuler when it comes time to spend money—or to call for ideologically motivated cuts in budgeting for everything from Planned Parenthood to NPR.
But the tax cuts have been a sacred cow, with even President Obama compromising and allowing their extension just a few short months ago in order to pass unemployment extension. In other words, to get some funding for the working class, we have to keep right on giving unneeded handouts to the rich. As Bernie Sanders noted in his eight-hour Senate floor speech against that extension:
This agreement between the president and the Republican leadership also calls for a continuation of the Bush era 15-percent tax rate on capital gains and dividends, meaning that those people who make their living off their investments will continue to pay a substantially lower tax rate than firemen, teachers, nurses, carpenters, and virtually all the other working people of this country.
The Economic Policy Institute notes that the top 1 percent got 65 percent of the total income gains during the economic expansion of 2002-2007, and Mark Price, a labor economist with the Keystone Research Center, notes that job growth during that expansion “was weaker than in the '90s expansion, an expansion preceded by tax increases.” Worse still, he says, “the tax rates didn't increase tax revenue and contributed to a rapid run-up in US debt.”
From 2001 to 2010, EPI notes, the cuts added nearly 50 percent of the total debt accrued--$2.6 trillion. With a T. And in the December 2010 deal that Senator Sanders railed against, that extension of the tax cuts will decrease revenue by another $423 billion between 2012 and 2021. That will make the total cost over $5 trillion, and account once again for about half of the total projected deficits for that period.
Price points out:
”As if [the debt] were not bad enough, the tax cuts came just before a surge in income inequality that would raise income inequality to a level not seen since the period shortly before the Great Depression. And now that the Great Recession has wiped out the job growth of the previous decade, much of the debt generated by those tax cuts is being used as a justification for the government to do nothing more to help the millions that remain unable to find enough work.”
EPI also notes that workers fared worse in the Bush years the further down they already were in income distribution, and that the unemployment rate never returned to pre-recession levels. Four years ago, Heidi Shierholz of EPI points out, the unemployment rate was 4.4 percent, and 11 years ago it was 4.0 percent. She also reminds us that once again, those hit hardest by the recession are young people, people of color, workers with less education, and workers with disabilities.