Tuesday, May 22, 2012

Almost Time to Renew the Bush Tax Cuts


Bush tax policy leads to income disparity
Bush Tax Cuts were enacted in 2001 and 2003, and According to OMBWatchCenter on Budget and Policy Priorities, and the Tax Policy Center, the rise in income inequality has much to do with the Bush tax policy (Bush tax cuts were extended by President Obama in December 2010).  In February 2007, President Bush addressed the rise of income inequality by asserting that "The reason is clear: We have an economy that increasingly rewards education and skills because of that education." According to Wikipedia:
Critics state that the tax cuts, including those given to middle and lower income households, failed to spur growth. The cuts also increased the budget deficit, shifted the tax burden from the rich to the middle and working classes, and further increased already high levels of income inequality. Economists Peter Orszag and William Gale described the Bush tax cuts as reverse government redistribution of wealth, "[shifting] the burden of taxation away from upper-income, capital-owning households and toward the wage-earning households of the lower and middle classes."

Bush tax policy doesn't lead to jobs
Obama inherited the worst economy in (most peoples') living memory. But the tax policies from Bush were continued when, in 2010, Obama signed the tax cut extension and unemployment remains high. In the graphic below, Bush policies extended through 2009, because the fiscal year for 2009 began on September 1, 2008, and cannot reasonably be attributed to Obama simply because he was in office. People wrongly make the assertion that just because Obama took office in 2009, that somehow, magically, his policies take over. That's not the case, for at least the majority if not all of 2009. 
Unemployment Rate over 10 Years. Tax cut policy was extended in 2010.
Data Source: BLS
Graphic: Groobiecat

4 comments:

  1. When do you make the switch from one Prez to another in terms of "responsibility"? Some say right away (makes no sense), some say 3 or 6 months; some say that whole first fiscal year.. some say the whole first chronological year.

    The whole effort is rather silly and people with brains can understand the nuances of Presidents and unemployment... But too many people don't have brains out there and want something in black and white.

    We've added 4,248,000 private sector jobs since the "trough" of jobs in February 2010, and that is good enough for me. 26 straight months of increases in private-sector jobs.

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    1. Well, I struggled with this a bit in a another post. The post today, in which I explain that Romney's view of spending is dead-wrong, lists that Obama did own part of the deficit in 2009, but only part. The real answer is probably somewhere in between: 9 months for a straight budget, since the fiscal year starts in September of the previous year. And "ownership" for budgetary modifications. The WSJ editor explains it well:

      Obama is not responsible for that increase, though he is responsible (along with the Congress) for about $140 billion in extra spending in the 2009 fiscal year from the stimulus bill, from the expansion of the children’s’ health-care program and from other appropriations bills passed in the spring of 2009.

      If we attribute that $140 billion in stimulus to Obama and not to Bush, we find that spending under Obama grew by about $200 billion over four years, amounting to a 1.4% annualized increase.

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  2. And let's remember why Obama got saddled with continuing the Bush tax cuts: The Republicans were holding the unemployed hostage. It was a smelly compromise, but that's what happens when we have a divided government; especially divided with these despicable Republicans. As a family that needed those unemployment extensions in December 2010, we were very grateful for that compromise.

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    1. You raise excellent points, MM--good memory on a very, er, "taxing" bit of modern history. Your even-handed summary is pretty much dead on. I find myself torn, sometimes, between the "give and take" of negotiations. It's so easy for people to say "Just do it!" but when you're dealing with such incredible intransigent rightist orthodoxy--the likes of which would have made Reagan blush--it's easy to cast aspersions. Thanks again for the thoughtful comments.

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