...the laying of taxes is the power, and the general welfare the purpose for which the power is to be exercised."
Thomas Jefferson.

Tuesday, February 22, 2011

Record Highs And Lows

Here is a compilation of Bush economists who state that his tax cuts did not increase revenue but reduced it. I don't know why we need to be told that but there it is.

Here you read that "If there's one thing that economists agree on, it's that these claims are false. We're not talking just ivory-tower lefties. Virtually every economics Ph.D. who has worked in a prominent role in the Bush Administration acknowledges that the tax cuts enacted during the past six years have not paid for themselves--and were never intended to. Harvard professor Greg Mankiw, chairman of Bush's Council of Economic Advisers from 2003 to 2005, even devotes a section of his best-selling economics textbook to debunking the claim that tax cuts increase revenues.
The yawning chasm between Republican rhetoric on taxes and even informed conservative opinion is maddening to those of wonkish bent. Pointing it out has become an opinion-column staple. But none of these screeds seem to have altered the political debate. So rather than write yet another, I decided to find out what Arthur Laffer thought.
Laffer is a bona fide economist with a doctorate from Stanford. He's also largely responsible for the Republican belief that tax cuts pay for themselves. Now 67, Laffer runs economic-consulting and money-management firms in Nashville. About the best I could get out of him on the question of whether the Bush tax cuts have paid for themselves was "I don't know." But that's only part of the story.

...In other words, the Bush tax cuts were meant to create big deficits. But Laffer's O.K. with that. "The Laffer Curve should not be the reason you raise or lower taxes," he says. Perhaps not, but it does make for great campaign promises.

Here's a look at the Laffer curve's effect in real life and guess what? in all three categories central to the claim of supply-side proponents, the economy performed significantly better in the wake of tax increases than it did in the wake of major tax cuts.
(Note: All data below have been adjusted to account for inflation.)
Private investment:
After the ‘81 Reagan tax cuts, private nonresidential investment over the next seven years grew at an annual rate of 2.8 percent.
After the ‘93 Clinton tax hike, private investment over the next seven years grew annually at 10.2 percent.
After the 2001 Bush tax cut, private investment grew annually at 2.7 percent.
(Data source: CAP/EPI study, Sept. 2008,, based on Bureau of Economic Analysis data.)
Federal revenue:
From 1981-1993, federal revenue increased by 20.7 percent over 12 years.
From 1993-2001, federal revenue grew by 46.6 percent over 8 years.
From 2001-2009, federal revenue decreased by 13.9 percent. (Even if you don’t include the deep recession year of 2009 — you might say we’re invoking the mercy rule — revenue increased just 3.3 percent over the eight years of Bush’s presidency.
GDP growth
From 1981-1993, real GDP grew by an annual average of 2.97 percent.
From 1993-2001, real GDP grew by an annual average of 3.56 percent.
From 2001-2009, real GDP grew by an annual average of 1.56 percent.
(Source: U.S. Bureau of Economic Analysis)
Here we are at a point in our history where we have record shattering deficits, record low rates of taxation and the largest income AND wealth gap in our history, arguably tied with the Great Depression, with ever-rising health care costs that drag the economy down and we have approximately 30% of the population that will not pay heed to any of this. Not Any! Resentment and defense of an old culture is amazingly good at getting people to ignore what's in front of their face. Maybe I'm going to go get the history of job growth for the three presidential terms and add it here later. But you know he didn't hardly create any. 

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