Liberal FUD Department Redux
This NYT Graphic keeps coming up repeatedly (it's been so widely reproduced, many don't even realize that the Times is the original source!) It's really emblematic of the mindless leftist FUD about economics. Just for starters, this thing represents the "Bush Tax Cuts" as a "cost". What they fail to understand is that tax rates and tax revenue are two different things.
Since the Eisenhower administration in the 1950's federal tax revenue as a percent of GDP has averaged about 18 percent. It didn't matter whether top tax rates were 92 percent (yes, they were that high!), or as low as 30 percent. Tax "rate" differences are not a "cost" item that you can just stick in some chart and say, "See! Bush cost us more money than Obama!".
Tax "Cuts" (or in reality "current tax rates", whatever they may be) are not really a cost at all. What we need to measure is revenue to determine if current tax policy is good or bad. These cuts were passed in response to a recession occurring as George W. Bush entered office.
reference: [New York Times] http://www.nytimes.com/2011/04/14/us/politics/14obama.html?_r=1
"The use of the phrase “tax expenditures” allows the administration to lump tax-related issues into the spending category."
reference: [Human Events] "Tax increases are spending cuts"http://www.humanevents.com/article.php?id=42921
"How do you cut a trillion bucks in spending from the tax code? The tax code is how the government takes in revenue. It doesn’t “spend” money."
Under Bush’s "tax cuts for the rich" the rich paid more in taxes in 2005 than any time in the prior 20 years. In fact, as the Wall Street Journal noted, thanks to Bush’s "tax cuts for the rich", the richest one percent went from paying 25% of all income taxes in 1990 to 39% in 2005. The richest 5% went from paying 44% of all income taxes in 1990 to paying 60% of all income taxes in 2005 -- all of this during the Bush administration. So if the Bush "tax cuts for the rich" are a cost, why did the rich end up paying far more in taxes? Simple: THEY MADE MORE MONEY. They employed more people. The lower tax rate structure encouraged job and wealth creation, and economic growth.
More importantly, after the 2001 initial tax cuts, the annual growth rate went from 0.3% in 2001 to 2.5% in 2002. By 2004, GDP growth was the highest in 20 years.
Likewise, after the 2003 tax cuts, the unemployment rate fell to the lowest level since World War II.
During the Bush years, despite the 2000 Recession, the attacks on 9-11, the stock market scandals, Hurricane Katrina, and wars in Iraq and Afghanistan, the Bush Administration was able to reduce the budget deficit from 412 billion dollars in 2004 to 162 billion dollars in 2007, a sixty percent drop. During the Bush years the average unemployment rate was 5.2 percent, the economy saw the strongest productivity growth in four decades and there was robust GDP growth.
So the next time some lefty liberal attempts to tell you that "tax cuts" are a cost, get the facts.