April 27, 2007
Those Bush Tax Cuts
Whenever some liberal talks about "those Bush tax cuts," three things may come up, and all of them are wrong: (1) it's only for the rich, (2) it will drive the federal deficit up, and (3) it won't help the economy. Maybe there's a (4)...it hurts the children, which we'll ignore. What has actually happened since the cuts became law?
The Dow and the Bush Tax Cuts
by James Pethokoukis, senior writer at U.S. News & World Report
With the Dow industrials making new records every day of late–even cracking the 13,000 barrier to fascinate all the Wall Street numerologists out there–I thought it would be a real kick to see how the stock market has performed since Congress passed the 2003 Bush tax cuts on May 23, 2003. (The Jobs and Growth Tax Relief Reconciliation Act accelerated the 2001 tax cuts and cut taxes on capital gains and dividends.) Since then, the Dow is up 52 percent, the S&P 500 60 percent, and the Nasdaq 69 percent. (Overall, the stock market has created some $6.8 trillion in new wealth since then as the size of the economy has grown by some $2.8 trillion, not adjusted for inflation.)Also note that the federal budget deficit was $378 billion, or 3.5 percent of gross domestic product, in 2003. But by 2006, the deficit had shrunk to $248 billion, or 1.9 percent of GDP. And it sure looks as if those numbers are headed even lower as tax revenues continue to flood Uncle Sam's coffers at an amazing pace. In fact, the U.S. Treasury said that it took in $48.7 billion on Tuesday alone, a new record.
But, the Democrats intend to let the tax cuts automatically expire at the end of 2010, effectively raising taxes again (even though they won't say they are being raised.) They tend to think that the money a person earns belongs to the government and that the government only allows you to keep some, and they believe that the government knows how to better spend your money than do you. (Well, I've never purchased obscene and insulting art work with my money.)
Having been stung on this before in a presidential race, the Democrats are not going to admit that they will force a huge tax hike on the people, but the Republicans and many of us need to remind the voters that is exactly what they intend to do.
If the tax cut is working, don't mess with it.
Posted by Woody M. at April 27, 2007 02:20 PM | TrackBack$6.8 trillion in new wealth? Wow! That would mean roughly every man woman and child had an increase in wealth of $22K during this period of time. Excuse me if I'm a little disbelieving of this article.
New wealth has indeed been created but not for me, you, or anyone who works for a living. Instead this wealth has been created for those who already are wealthy. We can start with CEO's, bankers and insurance folks at the top of the robber baron list. Apparently "Trickle Down Economics" means being wizzed on by the rich.
Posted by psyberwolfe at April 27, 2007 05:21 PM
Retirement funds for teachers, firemen, office workers, etc. are invested heavily in the stock market. Yes, these returns are shared in great part by the people further down, and those people are counting on their retirment money, which this prosperity further increases and insures. In addition, a healthy economy with investing means a low unemployment rate, which is lower now than at any time under Clinton. Would you be better off if the stock market was doing poorly? No, I didn't think so.
Posted by Woody at April 27, 2007 06:00 PM
Psyberwolfe, spoken like a true liberal. However, Woody is correct, the amazing growth of jobs and services in this country is FULED by available money. The vast majority of the stockmarket is owned by institutional owners such of retirement fundes etc. Sorry, to a liberal the truth hurts and the myth assuages!
Posted by GM Roper at April 27, 2007 07:52 PM
Multi-multi-millionaires are convinced that I'm overpaid. I haven't taken those kind of drugs in a very long time.
Posted by Weapon of Mass Disturbance at April 28, 2007 07:16 AM
The marketplace determines whether or not you are overpaid. If you are not and they won't give you more, then change jobs. If companies paid what employees think they are worth rather than what the market dictates they are worth, the stock market would have gone down the tubes a long time ago. Only you can make yourself worth more by either getting new skills in demand or increasing production. Blaming "multi-multi-millionaires" only makes you more bitter.
Posted by Woody at April 28, 2007 08:20 AM
It is more that simply amazing, it is astounding. You rich conservatives keep telling me how much money is growing on the trees, How much money is being collected by the IRS, How well the stock market is doing, but to get down to the nut of the matter! When the Bush tax cuts took place, the national debt was 2.5 trillion dollars. Do you care to take a guess at what it is now? After all the economic growth, stockmarket, floods of money in the business place, Now we owe something north of SEVEN TRILLION dollars. Much more of this republican style prosperity and the country will be bankrupt. Guess what happens then? 1932 was kid stuff. I was there, I wouldn't like to replay those days.
SO Woody, GM etc quit wizzing on my leg and telling me it raining.
Posted by James S Melbert at April 28, 2007 05:38 PM
An additiion to he above.
You know where the extra 5,000,000,000,000. went?
It was recycled into the economy. That money didn't evaporate into thin air, it was spent by the government to subsidize farmers, and other segments of the economy, and for the last four years to finance Bush's war. Not one cent of the national debt went to pay the Social Security/ Medicare beneficiaries. In fact the government took the EXCESS social security tax payments to help make their books look better.
The Clinton administration and the Last Democratic congress actually had a paper balance and were talking about REDUCING the public debt.
Man, hey were pikers compared to the Republican administration and Congress.
Posted by James S Melbert at April 28, 2007 05:49 PM
James, let's increase the tax rate to 80% and let the government spend us into prosperity and finacial freedom.
Posted by Woody at April 28, 2007 06:10 PM
Liberals (and the current Democrat and immediate past Republican congresses - back about 8 year or so) are always free with someone else's money. That is what they call compassion... I call it robbing peter to pay paul. By the bye James, you surely remember when "medicare" would NEVER cost more than say 18 billion... thus sayeth Hubert Horatio Humphry... remember that and then the Democratic congress right up till 1994 upped Medicare to buy votes. Right? (not that the repubs have been any better) By the bye, I'll trade what I make for what you make any day of the week... care to switch bank accounts?
Posted by GM Roper at April 28, 2007 09:13 PM
Woody first I would like to say I'm not tax and spend Democrat. I ask for fiscal responsibilty. They say that the economy is growing but we will soon be looking at out of control inflation. (Have you noticed gas prices recently?) This President has been the epitome of tax and spend. He is out of control and no matter what you say we will have to pay for this war either now or later.
CEO's don't do what they are worth. CEO's today prey on their companies drain them dry and throw away the workers. 6 to 9 figure bonuses are excessive and let me know that these CEO's only have their intrests in mind. They are thieves robbing from the workers that have made them successful.
My problem is that while my tax burden has decreased slightly taxes on the top 10% have dropped drastically. I think that the rich should pay an equal share to what I pay. You see my fair share takes a lot more out of my check than it would for someone who makes more.
Posted by psyberwolfe at April 29, 2007 06:48 PM
Woody, You did it again. Failing to be able to answer, you make some childish answer. It should be obvious even to you, that if the congress is going to spend money like they do, You must make the income equal to the outgo.
This was the great secret of the WWII years. Prior to 1939, a person calculated the income tax and paid it lump sum. The new dealers then in charge realized that withholding some every pay day would lull the populace to sleep, and that was quickly proven.
Today you and GM seem to think that you can starve the government, well you can't. They print the money, So the answer is, or should be. RAISE THE TAX TILL THE POPULACE REALIZES THAT THEY CAN DO BETTER BY ELECTING DIFFERENT CONGRESS FOLK. Politically it can never happen because the foxes are in the hen house. Raising taxes is anathema to our political types. Bloggers can help by beating the drum for a balanced budget, perhaps even make the requirement that the National Debt be Paid.
That would not be letting the government spend us into prosperity, even though the tax rate might be 80%. But the people behind the scenes, the string pullers will maybe decide that changes need to be made.
In 1932, the US was very near to civil revolt because of the government actions. Roosevelt, with all his warts and democratic principles averted the revolt by he establishment of the Civilian Conservation Corps. He made jobs for those that were not able to find any. And if you say that they could have found them if they had looked harder, you really should be slapped in the mouth. They looked long and hard. They worked for 70cents a DAY. Even though you could rent a house (not a real good one) for $5.00 a month that still took a weeks income to pay for that.
Let me tell you again, that if we don't pay attention, we will get back to those days, even if a man makes $70.00 a day.
Posted by James S Melbert at April 29, 2007 10:27 PM
I can't be terribly upset at either psyberwolf or James for advocating fiscal responsibility. The conservatives point that we can grow faster than we shrink, and the trickling down occurs even when it's hidden in retirements, more jobs, benefits, and housing valuations (as opposed to a $22K raise) may be true; it would be truer if we spent less on subsidies.
James, Roosevelt probably did avoid the revolt by creating an impression of jobs and hope. But he likely prolonged the Depression. On balance, he may have made the right choice, because impressions are as important as structural changes in the short run, and who wants to send the country socialist while insisting they did the "right" thing?
But it's not the same thing as actually improving the economy.
Posted by Assistant Village Idiot at April 30, 2007 08:28 PM
