Tax Cuts Clearly Explained
Democrats are arguing to keep something they said never existed.
- According to the Congressional Budget Office, the entire package, as currently proposed in the Senate, would add $858 billion to the 2011-2020 deficit.
- Of that $858 B, about $544 B comes from keeping current tax rates; the rest comes from the new goodies unrelated to the Bush rates.
- The CBO calculates future revenues under the assumption that tax rates have zero effect on the behavior of investors, consumers, employers, etc.
- “(T)op Democrats say we must keep the Bush tax rates or the recession resumes.
- Pres. Obama says that “‘economists from all across the political spectrum agree’ on that. I believed he polled the same economists who said his stimulus would keep the unemployment rate below 8%.”
- As a matter of record, the final Bush tax rates passed Congress in mid-2003, shortly after Republicans retook the Senate.
- From August 2003 to December 2007, over eight million net new jobs were created;
- real GDP grew almost 3% per year.
- At that same time, federal revenues increased by 2.3% of GDP ($785 B), putting revenues above the average level of 1960-2000, the forty years before Bush.
- Unemployment fell to 4.4%,
- and the deficit fell to 1.2% of GDP. Such was the catastrophe of four years of Bush’s tax rates and Republican-written federal budgets.