Groups push for end to Bush tax cuts
As Congress and the president debate whether and on what conditions to raise the debt ceiling, America marks the tenth anniversary of the policy change that accounts for much of the federal budget gap: the Bush tax cuts. On July 7, 2001, George W. Bush signed into law a $1.35 trillion tax cut that primarily benefited the wealthiest Americans while leaving our country with massive debt.
Virginia Organizing supporters gathered today in front of Rep. Robert Hurt’s office in Danville and the Fredericksburg Public Library to bring attention to the terrible effects the Bush tax cuts have had in Virginia. Participants shared their experiences over the past 10 years and what they think the money could have been used for locally instead. Residents also expressed their concerns for Rep. Hurt’s, Rep. Rob Wittman’s and other Virginia members of Congress’ recent vote in support of Rep. Paul Ryan’s controversial budget proposal to end Medicare, as we know it.
Tuesday’s events were part of dozens taking place around the country as supporters of Medicare, Medicaid and Social Security protest efforts to cut essential services while giving trillions of dollars in additional tax cuts, exemptions and loopholes to the super-rich and to corporations.
In Fredericksburg, participants like Joe Katz flushed play money down a toilet, to represent the valuable capital that went to millionaires instead of schools, health care, police and libraries. “I believe there’s no excuse for our leaders in Washington to cut our Medicare, Medicaid, or Social Security so that millionaires can have huge tax breaks. The Bush tax cuts didn’t create jobs for Virginians, they basically went down the toilet.”
“The working people of Virginia did not fire Americans and send their jobs overseas. We didn’t take absurd risks on Wall Street. We didn’t get a bailout from the government or make the housing market implode. The wealthy corporations and banks did that, and we’re not going to give up our Medicare, Social Security, and other lifelines so that the people who ruined our economy can keep avoiding taxes,” added Katz.
David Harrison of the Virginia Organizing Danville Chapter joined other residents in front of Rep. Hurt’s office today in Danville. “I came out today to highlight the fact that our country’s descent into debt began in 2001 with a choice, not a crisis. I’m tired of the conservatives in Washington making the elderly, poor and middle classes pay for tax cuts that the wealthy do not need. How can leaders in Congress claim they are serious about reducing the deficit and continue to give tax breaks to the rich?”
“The country needs the top two percent and major corporations to pay their fair share in taxes. By closing corporate loop holes and ending the Bush tax cuts, the country would be able to pay for vital services working Americans need,” added Harrison.
The Economic Growth and Tax Relief Reconciliation Act of 2001 (the first of a series of Bush-era tax changes) was enacted on June 7, 2001. Ten years later, the Bush tax cuts have exacerbated trends of widening income inequality, accompanied the weakest economic expansion since World War II, and turned budget surpluses into deficits. As detailed in a new Economic Policy Institute policy memorandum, these tax cuts were heavily targeted toward the wealthy at the expense of middle class families, poorly designed as an economic stimulus, and costly—significantly more so than advertised.
According to new figures released by Citizens for Tax Justice, the wealthiest one percent of Virginia residents, who will have an average income of $1.3 million in 2013, would receive an average tax cut of $70,149 in that year.
In contrast, the poorest 60 percent of the state’s residents, with an average income of $31,828, would receive a tax cut of just $569 in 2013. To put that number into perspective, the average American household pays $300 a month just to fill their gas tank.
Holly Sklar: Tax deal like a bait-and-switch mortgage
Republicans played President Obama in the tax deal like mortgage hustlers played homeowners. Focus on the teaser rates, borrow more than you need and trust us to work with you to refinance later when rates jump.
The teasers are the needed extension of unemployment benefits – always extended before with high unemployment – and continued tax cuts for non-rich Americans. The President folded on more tax cuts for millionaires and doubled down with a renovated estate tax set at the lowest rate since 1931. And a cut in the Social Security payroll tax, which Republicans will use to gut Social Security later.
The tax deal will cost most Americans and our economy much more than it gains.
Obama’s tax deal falls for the same trap Republicans have been running since the Reagan administration. Cut taxes to reward the wealthy and purposely run up the debt to cause cutbacks later in programs Republican lawmakers don’t like, which is most everything outside the military and corporate subsidies for Big Oil, Big Pharma and other favored big business using small businesses as poster children.
Handed a budget surplus by the Clinton administration, President Bush slashed taxes – breaking precedent by asking the wealthy to pay less, not more, during wartime – and chopped away at the public services and infrastructure that underpin actual job creation and long-term economic growth. Bush left America in the worst economic crisis since the Great Depression, and falling down the world rankings in wages, living standard, life expectancy, economic mobility, education, infrastructure and global competitiveness. The richest 1 percent of Americans had the greatest share of national income since 1928, which was not coincidentally right before the Great Depression.
Today, the too big to fail banks are bigger and Wall Street continues paying big bonuses for playing heads I win, tails you lose with our money. Wall Street campaign donations flooded to Republicans promising to roll back financial reform. Big businesses are sitting on a record pile of cash and liquid assets while small businesses still get the cold shoulder from banks. Millions of Americans have been foreclosed or are in default. One out of ten Americans are unemployed by the official count, which leaves many uncounted. Our infrastructure – much of it built decades ago when the highest-income taxpayers were more productive and less greedy – is rotting. The promised green jobs of the future are increasingly today’s jobs in Germany, China, Brazil and other countries investing more in their economies.
And now comes the tax deal, offering tax cuts that will be paid for next year and the years after by pay freezes and big budget cuts for the services and infrastructure most Americans and a healthy economy depend on. In a twist on the rightwing strategy long known as “starve the beast,” Senate Republican Leader Mitch McConnell praised the tax deal as “cutting off the spigot.”
People used to talk about robbing Peter to pay Paul. Now it’s more like robbing everyone to pay the richest 1 percent.
In the set up to the real robbery, the bottom 20 percent of Americans will save $396 on average in 2011 from the tax deal, the middle 20 percent will save $1,521 and the richest 1 percent will take the lion’s share, saving $76,949, according to Citizens for Tax Justice. The tax deal cost of $424 billion in 2011 will be added to the national debt.
Enabled by Obama, the Republicans will use the increased debt to set up the ultimate foreclosures: Social Security and Medicare. “President Obama and the Republicans will say that the payroll tax holiday is all about stimulating the economy. But don’t be fooled,” said Nancy Altman, co-director of Social Security Works. “There are many better ways to stimulate the economy with that $120 billion the payroll tax holiday will cost, including simply extending the Making Work Pay Tax Credit … And the other, better forms of stimulus pose no threat to Social Security.”
The payroll tax holiday, which will likely be extended, not ended heading into the next election, poses a grave threat. Scrapping the cap on earnings subject to Social Security taxes – now just $106,800 – eliminates the future Social Security shortfall projected after 2036. Cutting the tax while leaving the cap is a gift to those who want to cut, privatize and destroy Social Security under the pretense of saving it.
Like the bait and switch mortgages still wreaking havoc, the tax deal sets up big losses to come.
Holly Sklar is the director of Business for Shared Prosperity (www.businessforsharedprosperity.org), which produced “The Business Case for Letting High-End Tax Cuts Expire.” Readers can write to her at hsklar.writer@gmail.com. An earlier version of this article appeared in The Hill.
Brian Miller: Hostage-takers and the Obama-GOP tax package
As millions of unemployed Americans struggle to make ends meet amidst an economy still in shambles, a note is quietly slid under the door: “Give us $800 billion in tax breaks or your unemployment benefits are history!” In a classic made-for-television cop drama, this is the part where the heroic police captain would emphatically declare, “We don’t negotiate with hostage-takers!”
But that’s not what happened last week. President Obama gave in. Now Congress and the American people are being asked to swallow an poorly conceived tax cut proposal.
Thankfully we have more than one branch to our government – a healthy check to a bad executive decision in this case. The House Democratic Caucus has made its position clear. No deal unless significant improvements are made. Under this lopsided tax giveaway to the richest among us, 64 percent of the total tax package will go to the top fifth of income earners adding hundreds of billions to our national debt. Fully 25 percent of the largess will go to the top 1 percent alone, who will take home an average of $76,000 in tax cuts. Unlike the television cop drama, there’s no exploding ink canister in this bag of unmarked bills.
Let’s be clear. These tax cuts will do little or nothing to stimulate the economy despite the hollow claims of Congressional Republicans and conservative pundits. According to a Moody’s report, making the Bush tax cuts permanent will lead to 30 to 35 cents of economic stimulus for every $1 we give up in federal revenue. That’s a very poor investment. By comparison, revitalizing our nation’s infrastructure or extending unemployment benefits will lead to roughly $1.60 in economic stimulus for each $1 we spend.
Public investments deliver more economic bang-for-the-buck because building a school creates construction jobs and employs teachers in our own back yards. The same can be said for building high-speed rail systems or retrofitting old buildings with green technologies. Those newly employed workers spend that hard-earned money in their communities, leading to even more stimulus. Unemployment benefits are also spent almost immediately to help hard-pressed families make ends meet. Tax breaks on the other hand, especially tax breaks for the very rich, are more likely to be saved or used to pay down debt. Noble as that may be, it won’t jumpstart an ailing economy.
However, the real problem facing our nation is far more profound than the misguided efforts to use tax cuts as a way to stimulate the economy. Congressional Republicans fail to understand that the problem with our economy lies in a middle class that has been beaten down and bankrupted by decades of failed trickle-down policies. Despite all the promises to the contrary, wages for most Americans have been stagnant over the past three decades while incomes at the top have soared.
Income inequality is now at the highest level it has been since 1928, just before the Great Depression. Despite this grim and alarming fact, Congressional Republicans are telling us the problem with our economy is that rich people don’t have enough money. Really? And worse, they’re willing to hold millions of unemployed Americans hostage to leverage even more tax breaks for their Wall Street and big bank allies.
One of the most unexpected concessions was a multi-billion-dollar giveaway to the heirs of vast fortunes by weakening the estate tax far beyond the already feeble 2009 levels. Under 2009 law, a child of a wealthy couple could inherit more, tax free, than the average American earns in four lifetimes, but that’s not good enough for the hard-line Republicans on Capitol Hill. Under the Obama-GOP deal, the estate tax would be weaker than at any time in the last 70 years.
As Congressional Republicans and their well-heeled supporters are poised to grab the sack of unmarked bills, we’re counting on House Democrats to stop them from making a clean get away by fighting for a better deal for all Americans. But, unlike the entertaining television cop drama hostage-standoff, our nation’s future and the strength of its middle class is on the line instead.
Brian Miller is executive director of United for a Fair Economy, a national organization that works to raise awareness of the dangers of extreme inequality, and promote a more broadly shared prosperity.
Kenneth Lewis: What’s all the fuss about top tax rates going up 4.6 percent?
The national conversation on our fiscal health for the past few months has been about whether to extend the Bush-era tax cuts for households with incomes over $250,000, or to allow them to expire on December 31st. To my amazement, lost in all this controversy and discussion has been any mention of what this would really mean for high-income people in the context of historical tax rates.
During the 1950s this country was flourishing economically and adding new jobs that moved millions of people out of poverty and into the middle class. What kind of tax policy was in place during this period, those years after World War II when the Baby Boomers were growing up?
What was the top marginal tax rate during all eight years of the Eisenhower Administration? 91 percent! The increase proposed for today’s rates seems paltry, and the top rate seems very low, in fact too low, and incongruent with the needs of the country for investment right now in education, health and infrastructure.
This comparison is also true when looking broadly over the mid-century; during the years from 1935 to 1980 the marginal rates were never below 70 percent.
One can only wonder what the big fuss is all about.
Right now people pay income taxes on a sliding scale between 10 percent and 35 percent. If the Bush-era tax cuts expire on December 31, the rates would return to between 15 percent and 39.6 percent. Less than one percent of taxpayers now pay the 35 percent (according to the Wall Street Journal) and less than four percent pay 33 percent. If the tax cuts are allowed to expire, the top tax rate of 39.6 percent would only apply to those whose income, adjusted for inflation, exceeds $363,000 per person.
So in reality, the big controversy over the extension of tax cuts boils down to a mere 4.6 percent for those making over $363,000! And remember, they pay that extra amount only on incomes over $363,000, not their entire income. Based on the arguments and emotional forcefulness of those who want all tax cuts extended, one would think that the rates we are talking about are historically high rates. Top rates of 35 percent and 39.4 percent aren’t even close to historic highs.
At a time when reducing the deficit is a main concern of both the public and of policy makers, it seems incredible that there is even any discussion about this. Letting the tax cuts expire for the top two to four percent of high earners will reduce the deficit by over 700 billion dollars. How can we not do this?
The argument that lower tax rates leads to increased employment is belied by the experience during the Bush Administration. The most massive tax reductions in US history occurred during those eight years, and the increase in employment during those years was the lowest in U.S. recorded history. Lower taxes did not lead to increased employment.
I have benefited enormously from the infrastructure that strong federal, state, and local governments provide. As a businessman I have used more than my fair share of these public institutions and therefore, I want to pay my fair share. That’s why I’m asking Congress to raise my taxes!
There is no valid reason to continue these historically low tax rates for those making more than $250,000 or more than $363,000 during a period of economic stress. This country is in trouble and those of us who have benefitted the most need to step up and pay our fair share. The small rate increase will decrease the deficit by over 700 billion dollars and have no appreciable adverse impact on employment. In fact, I would argue it would stimulate job creation if Congress were to invest in this country again. The House has rejected letting the wealthy off the hook for their fair share. The Senate should act now, do the right thing – and also reject the compromise.
Kenneth Lewis is former president of Lasco Shipping Co. of Portland and of the Port of Portland Commission. He is also former national chairman of the I Have a Dream Foundation and a member of Wealth for the Common Good.
A move on moment from House Dems
“Just say no! Just say no!” Seriously? That’s the best House Democrats can do these days – is mirror House Republicans?
Any semblance of sanity on the Dem side is now officially history, which means, for all intents and purposes, there isn’t any semblance of sanity in D.C. anymore. Not that there was much even in semblance before House Democrats jumped the shark.
Their reaction to President Obama’s reachout to Republicans to offer support for a two-year extension of the Bush-era tax cuts for the superwealthy in exchange for GOP support for an extension in benefits for the long-term unemployed is beyond the pale. The message sent to the American people: As a matter of principle we’re going to raise your taxes and cut off the long-term unemployed, the meager job market be damned.
The principle they’re trying to advance doesn’t make much sense. OK, so Republicans have for the past two years been the “just say no” party on the Hill, got it. But they weren’t successful in the midterms just because they always say no. How about – they were successful because the voters gave Democrats the White House and big majorities in the House and the Senate, and Democrats couldn’t get anything done?
More columns by Chris Graham at TheWorldAccordingToChrisGraham.com.
I’m not even sure that i count health-care reform as something done, if only because what finally passed was so pedestrian, and pushed down the road key provisions from taking effect. Meanwhile, nothing gets done on climate change, nothing substantive is done to public education, nothing is done on the tax cuts until the lame-duck session, et cetera.
The president has been shouldering the blame for what hasn’t happened, but I think we’re starting to see what’s been gumming up the gears. It wasn’t so much Republicans as it was Democrats who worked themselves up to a point of giddiness over what they’d do once they got big majorities back in Congress and subsequently imploded in in-fighting that put the in-fighting that had crippled Republicans in the Bush years to shame. I say that because it took into the first two years of George W. Bush’s second term before we saw the ideological purging that led to the loss of Karl Rove’s permanent majority in 2006 and solidified itself with the election of Obama and the big wins by House and Senate Democrats in ’08.
Democrats, for their part, began bringing out the sharp knives and aiming them at each other even before they’d won that November. The so-called Blue Dogs, the fiscally moderate Democrats whose victories in a number of swing districts fueled the House majority, were never Democratic enough, and to them the liberal stalwarts might as well have been space aliens than members of their own party.
The internecine battles that ensued amplified the Republican “just say no” approach – in line with the old axiom about how when your opponent is going down in flames you should get out of the way and let him roast.
Me, I give President Obama credit, much like I gave credit to Bill Clinton in 1995 for pivoting after the GOP won the House and the Senate in the ’94 midterms. Clinton, unlike Obama, couldn’t even get a milquetoast health-care reform passed, so Obama has already done the Democratic legend one better in that respect. He still has a ways to go to match what Clinton was able to do in the wake of his midterm losses.
The reachout on taxes and unemployment benefits is a huge step in that direction. You ask me, the best thing House Democrats could have done for Obama heading into the 2012 election cycle is what they’ve been doing this week. By “just say(ing) no,” they’re giving the president the break from their failure to get anything of substance done that he will need to recast his image.
Column by Chris Graham. Chris can be reached at freepress2@ntelos.net.
Webb: Tax deal will reinvigorate U.S. economy
U.S. Sen. Jim Webb, D-Va., is on board with the bipartisan effort being led by President Obama to reach consensus on a two-year extenion of Bush-era tax cuts and an extension of benefits to the long-term unemployed.
“The framework agreement for tax cuts and extended unemployment insurance shows great promise in reinvigorating our economy and putting people back to work,” Webb said in a statement Wednesday.
Webb, calling the proposal “the ultimate stimulus plan,” said the agreement will “put more money directly into the pockets of people and small businesses, allowing that money to be quickly recycled as the economy expands” and that it will “provide greater certainty for business and investment planning and extend several programs that effectively serve working Americans and lower-income families.”
Webb, in the statement, urged quick action. “Failing to act now will result in higher taxes for almost all Americans starting on Jan. 1st – an unacceptable result for an economy that remains fragile and in danger of further job losses,” the senator said.
“No one will agree with every provision in the proposed agreement. The simple reality is that the American people, and particularly those who are out of work, cannot afford to wait while politics-as-usual blocks an effective, bipartisan plan to stimulate the economy and restore growth,” Webb said.
Story by Chris Graham. Chris can be reached at freepress2@ntelos.net.
Sandra Cook: End the Bush tax cuts for the wealthy
This weekend the Senate will finally be voting on the Bush tax cuts. This should not be a controversial vote for our leaders in the Senate. In fact, this is the first issue of the lame duck session where the public is overwhelming in agreement. A CBS poll this week found that only 26 percent of Americans favor extending the Bush tax cuts for all Americans including those making over $250,000. The rest are like me and support ending the Bush tax cuts for the wealthy and extending them for the other 98% of us.
Like most Americans, I have made sacrifices during this economic downturn. We have all endured severe budget cuts at the federal, state and local level that impact our lives in a variety of ways. If we are spending additional tax dollars at a time like this, we must be sure that it will lead to future economic prosperity. The problem is that extending the Bush tax cuts for the wealthy will not create jobs and future prosperity and will cost $700 billion over the next ten years. It will simply give the rich an extra tax cut they do not need. In the nine years of the Bush tax cuts, the U.S. has had the worst rate of job creation since the government began keeping records.
This weekend, I hope that Sens. Warner and Webb will cast a vote for jobs by ending the Bush tax cuts for the wealthy and extending them for the “rest of us.”
Sandra Cook is the chair of the Charlottesville-based Virginia Organizing Project.
Chris Graham: Thanks, Filibuster!
Republicans have found a handy tool – the filibuster – in their ongoing battle to kneecap Barack Obama and congressional Democrats.
That’s the good news. The bad news – well, good luck to the GOP when it gets the keys to the White House and majorities in Congress back.
“With little time left in this congressional session, legislative scheduling should be focused on these critical priorities. While there are other items that might ultimately be worthy of the Senate’s attention, we cannot agree to prioritize any matters above the critical issues of funding the government and preventing a job-killing tax hike,” reads a letter to Senate Majority Leader Harry Reid signed by all 42 Republican senators promising to block consideration of legislation in the lame-duck session of Congress until the dispute over extending the Bush-era tax cuts is resolved and an extension of current government funding is approved.
Read more columns by Chris Graham at TheWorldAccordingToChrisGraham.com.
The threat is just the latest in a series of successful filibuster threats by Republicans that effectively hamstrung Democrats from being able to do anything in terms of meaningful public policy in recent months. This with barely enough senators, 42, to be able to use the filibuster, or more accurately, again, the threat of filibuster, to steer policy discussions from the unusual minority bully pulpit that the unique parliamentary device provides.
Republicans were able to do a lot more in the 2000s (the Bush tax cuts and No Child Left Behind are two notable examples) with a lot less in terms of partisan-majority strength in large part because Democrats didn’t make the filibuster a top tactic in their arsenal.
Which isn’t to say that they haven’t seen how effective it can be with the success that Republicans have had in the halls of Congress the past two years now translated into success at the polls with the sales pitch to the voters that Democrats weren’t able to get anything done.
Oh, yes. As in sports, success breeds imitators.
The approach reminds me of something I’ve observed about the game of soccer, in which overmatched teams can pack it in by putting all of their efforts into the defensive side of the field in a strategy that accepts as a given that they’re not going to be able to score and thus win but also makes it so that their more talented opposition will have difficulty scoring a goal themselves. It’s a bargain that accepts 0-0 as the best possible outcome, but hey, you can’t lose 0-0, right?
The success of going all-filibuster, all-the-time means we can almost guarantee more of the same when the political winds shift, and the political winds are ever shifting.
Say goodbye to meaningful policy direction from either side from here on out. The race to a long line of 0-0 ties has already commenced.
And in the process, American power, economic, military and otherwise, already on the wane globally, has now officially jumped the shark.
Rick Poore: Ending tax cuts for high income brackets is right for small business
A good friend and fellow businessman once told me, “Give me more customers and I’ll be forced to buy equipment and hire people to meet demand. Give me a tax break without more customers and I’ll just go to Aruba.”
Ending the Bush tax cuts for the wealthiest taxpayers is the right thing to do for small businesses. I’ll say that again: it’s the right move for small business. Let me explain.
I consider myself an example of an average small business owner in Nebraska. I have 30 employees. My business does $2 million plus in annual sales. My personal income as the owner is less than $85,000 a year.
It’s a comfortable living, but ending the Bush-era cuts on the top two brackets won’t come close to impacting me. And it won’t impact the other small business owners I know, either. The top brackets won’t kick in until your taxable income is over $200,000/year for individuals and $250,000/year for couples, and they’ll only apply to the portion of your income above those amounts, not below them. Less than 3 percent of taxpayers reporting any business income (not limited to small business income) earn enough to break into the top two brackets.
But that’s not all. That 3 percent figure includes Wall Street hedge fund managers and K Street lobbyists whose income is reported as business income on their personal tax returns. Not exactly what you’d think of as small businesses, or our nation’s job creators.
Last time I checked, Wall Street types and their K Street friends had driven the economy into a ditch the size of the Grand Canyon and killed over 8 million jobs. Do they really deserve another tax giveaway to reward their efforts?
The idea that ending the Bush cuts for the top brackets will hamper small businesses’ ability to reinvest is a complete red herring. Any true small business that ends up with more than $250,000 net profit flowing through to the owner at the end of the year needs to hire a better accountant and rethink its business plan.
Let’s use me as an example. I gross a lot in sales, sure, but I’m busy reinvesting that money back into my business – buying equipment, promoting my business and hiring more workers. The dollars I reinvest don’t pass through onto my personal tax return so I don’t care if that rate changes a little bit, and neither do the millions of other true small business owners in this country.
Despite all this, some politicians continue to recycle the tired old myth that a small change in the top brackets will hurt business owners’ ability to reinvest in our businesses. There are two possible explanations for this.
First, these politicians have never been close enough to a small business to learn how our taxes actually work. We’ll call that an accidental sin of ignorance. A simple cure is to get out and meet some small business owners in their home states and hear about our day-to-day operations.
Second, some politicians are playing fast and loose with the facts. They know better, but they just don’t care. That’s intellectual dishonesty – a different kind of sin. Not much I can do to help there.
The bottom line is small businesses don’t need another tax giveaway. What we need are policies that restore our customer base by getting people back to work in our communities and putting money in their pockets to spend in our businesses.
Ending the high-end tax cuts would free up close to $40 billion in 2011 and $700 billion over the next 10 years to invest in job creation and rebuild our customer base. That’s what small businesses really need.
Rick Poore is owner of Design Wear Inc., a custom screen-printing business with 30 employees in Lincoln, Neb. He serves on the steering committee of the Nebraska Main Street Alliance.
The case for a strong estate tax
Column by Brian Miller
Submit guest columns: freepress2@ntelos.net
On New Year’s Day the estate tax, an essential part of the U.S. tax system for nearly 100 years, will disappear because Congress failed to act in December. Congressional leaders now are pledging to act in early 2010 to reinstate the federal estate tax retroactive to Jan. 1. In the meantime, rhetoric over the estate tax will heat up while Congress grapples with what to do now. Continue reading “The case for a strong estate tax” »
Brian Miller | A Labor Day for the 21st century
Every year, we celebrate Labor Day to honor the work of everyday Americans who built this country brick by brick, community by community. It’s an honorable holiday that pays tribute to honorable work.
While it’s always good to give thanks, we need much more than well wishes and a cheer of support. We need to ensure that the rules that govern our economic system, whether those rules come from Wall Street or from Washington, treat all Americans, particularly those who are the backbone of our economy, with dignity and respect. That’s what Labor Day is truly about.
Continue reading “Brian Miller | A Labor Day for the 21st century” »
William Barclay: The Bush tax cuts-10 years of economic disaster
Posted by afp on June 14, 2011 · Leave a Comment
As someone who has personally received these tax cuts during the past 10 years, I feel it is my responsibility to speak out.
Supporters of tax cuts for high income households, such as House majority leader John Boehner, argue that wealthy people are the “job creators” and that tax cuts will encourage them to create jobs and that these new jobs will, in turn, increase employment opportunities and improve the wages of the remainder of the population. Did any of these benefits occur after the Bush tax cuts? The quick and accurate answer is, no, they did not. Adjusted for inflation, the median weekly earnings of working Americans actually fell by 2.3% from the end of the 2000 – 01 recession to the onset of the Great Recession. This is unique in the post WWII period. Further, the recovery from the 2000 – 01 recession was the slowest of any post WWII recession to date, requiring 39 months before the number of employed Americans reached the pre-recession level. Where is even a scintilla of evidence that tax cuts such as those passed in 2001 and 2003 generate income and employment growth for the vast majority of the population?
A significant part of the failure of the Bush tax cuts to generate jobs and income growth flows from the top-heavy distribution of the benefits conveyed by these measures. The vast bulk of the reduced taxes were reaped by a very small number of families. In 2011, the average tax reduction to families receiving an income of $1 million or more (about 321,000 families) will be $139,199. For this less than 0.5% of all families this is a reduction in taxes of $860 million/week. Compare these tax benefits to the yearly savings proposed by cutting the WIC program: $833 million. An obvious question is, why can’t this very small group of extremely high income families give up just one week of their tax cut to provide nutrition for the tens of thousands of women and children that benefit from the WIC program? More significantly, in light of the deficit hysteria gripping Washington D.C., the combined impact of the 2001 and 2003 Bush tax cuts has been the addition of more than $2.6 trillion to the federal debt. This included more than $400 billion in interest payments on the debt necessary to pay for the cuts.
Of course, one might forgive these policy failures if the promise of economic growth had been fulfilled. On this measure, however, the record is even worse. The 2000 – 01 recession ended in the fourth quarter of 2001, just in time for the first Bush tax cut to take effect. From the end of the recession until the onset of the Great Recession, the economy grew at a slower rate than in any other post recession period since WWII. Thus, despite promises from the advocates of the tax cuts, the reality was slower growth rather than faster growth. The additional tax cut in 2003 did nothing to increase the pace of economic growth.
In sum, the Bush tax cuts were a bad idea at the time and are an even worse idea today. Ending these cuts for incomes over $250,000 would generate over $100 billion/year in additional revenue. If we also created additional tax rates for very high-income families (e.g. at $500,000, $1,000,000, $5,000,000 and $10,000,000) we could increase federal revenue by more than double that amount and put us on the road to reducing deficits and debts.
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