Tax Cuts are a Real Turkey for the Economy
On Thanksgiving Day, families across the country will sit down to turkey dinners and contemplate what they have to be thankful for. One blessing that everybody needs is a good job -- or jobs, in this day and age -- to put bread on the family table. President Bush agrees that creating good jobs is a priority. He has repeatedly promised that his large-scale tax cuts will grow the economy and create new jobs. So should families planning their Thanksgiving feasts be giving thanks to the tax cuts for having created a plethora of new jobs?
Resoundingly, no. The Bush tax cuts did not produce new jobs. In 2003, the President's Council on Economic Advisers promised 5.5 million new jobs by 2004, but only 2.6 million jobs were actually created. The jobs created failed to even match the 4.1 million new jobs expected in a normally functioning economy, let alone one supposedly supercharged by tax cuts. Yet that hasn't stopped conservative forecasters from chanting the "tax cuts create jobs" mantra in 2005.
The quality of jobs, measured by income, health insurance and retirement benefits, has also declined appreciably since the 2001 tax cuts. Between 2000 and 2004, inflation-adjusted family income declined, and the number of U.S. workers covered by employer-provided retirement benefits and health insurance contracted.
African-American and Latino families have seen their economic security deteriorate even faster than white families. Despite the president's statement that tax cuts would create jobs for all who want them, the racial economic divide has widened. African-American unemployment remains about twice as high as that of white workers. And the earnings gap between white workers and workers of color has grown even steeper since the 2001 tax cuts.
One of many reasons that tax cuts are a shaky formula for increasing jobs is that tax cuts mean less government revenue and therefore fewer public-sector jobs. Some tax revenues are spent hiring government workers -- direct job creation -- as well as purchasing goods and services from private businesses -- indirect job creation. Tax cuts may eventually stimulate investment that may generate some new jobs, but less government revenue will eliminate jobs at the same time, offsetting any positive job growth.
Tax cuts are an unsound prescription for job creation and economic good health, and more and more people recognize that relentless tax cutting, far from creating new jobs, has instead created a staggering deficit that threatens our children. Asked in an April 2004 CNN poll to choose between the 2003 tax cuts and a job creation program, 76 percent of respondents chose jobs; 50 percent chose deficit reduction over tax cuts; and 60 percent said they had not benefited from tax cuts.
The wisdom of the people's choice is reflected by the conservative chairman of the Federal Reserve, Alan Greenspan, who said: "We should not be cutting taxes by borrowing ... We do not have the capability of having both productive tax cuts and large expenditure increases, and presume (sic) that the deficit doesn't matter." (November 4, 2005). In contrast, the Chairman of the President's Advisory Panel on Federal Tax Reform, Connie Mack, had this to say in a recent interview in the New York Times Magazine:
Interviewer: Well, the U.S. government has to get money from somewhere. As a two-term former Republican senator from Florida, where do you suggest we get money from?
Mack: What money?
Interviewer: The money to run this country.
Mack: We'll borrow it.What have tax cuts given us to be thankful for? Nothing. The 2001 and 2003 tax cuts were a feast for the rich taken directly from the tables of the poor, the working class, the middle class, people of color, children and the elderly. Tax cuts made in the name of jobs that have not and will not materialize reveal a government acting in service of the voracious appetite of the very richest people in the United States.
The Bush administration's promise that tax cuts for the rich would trickle down to workers has been broken. And when tax cuts and more tax cuts haven't succeeded in job creation or economic stimulus, how can we expect that still more tax cuts or permanent tax cuts somehow will? These tax cuts have been a real turkey for the economy.