Posted on 12/04/2012 8:25:22 AM PST by ksen
The Republican Party has long promoted itself as the party of business. Republicans understand the needs of business, we are told, and if the country would leave the economy in their hands business would boom. All we need to do is to give those at the very top of the income distribution – the “job creators” – more income through tax breaks, and then sit back and wait for the magic happen. Our investment in the wealthy will produce remarkable economic growth, and everyone will be better off.
The Bush tax cuts were a test of these claims about supply-side economic policies. To justify the tax cuts the nation was, in effect, given a business prospectus from the Republican Party. We were promised that cutting taxes on the wealthy would result in much higher economic growth and broadly shared prosperity. For those who wondered how we would pay for such a large cut to the government’s revenue stream, the Republican prospectus had a remarkable claim. The tax cuts wouldn’t cost us anything. Growth would be so strong that the tax cuts would more than pay for themselves. Even those who admitted that the tax cuts might not be fully self-financing still made strong claims about faster economic growth offsetting much of the lost revenue from the tax cuts.
The reality, of course, has been quite different. There is little evidence that the Bush tax cuts, or any other tax cuts directed at the so-called job creators, have had a noticeable effect on economic growth. And the promise of broadly shared prosperity has not been realized. Most of the gains from economic growth in recent decades have gone to the top of the income distribution while the inflation adjusted wages of the working class have been relatively flat. Furthermore, the tax cuts have not paid for themselves as promised, and it hasn’t even been close. The Bush tax cuts have already cost us trillions in revenue, and if they are extended for high income tax payers, they will cost us roughly another trillion over the next decade.
The failure of Republicans to deliver on their promise that tax cuts would be mostly self-financing is a large factor in the deterioration in our long-run fiscal outlook, and it is putting considerable pressure on programs such as Social Security. In fact, the Bush tax cuts can be thought of as a loan from the Social Security Trust Fund that was supposed to be paid back with the revenues from higher economic growth, a loan that is presently in default.
To see this, recall that the government began intentionally collecting a surplus from the Social Security program beginning in 1983 in order to prefund the retirement needs of baby boomers. The idea was to run a surplus for several decades while the baby-boomers were still working to get ready for the deficit years the system would experience after they retired.
The revenue from Social Security over and above what was needed to fund payouts reduced the overall government debt and allowed taxes to be lower than they could have been without these surplus funds. For example, the surplus that Bush inherited from the Clinton administration was largely due to the Social Security Trust Fund, and Bush argued it would be better to give this surplus to the private sector through tax cuts than to leave it in the hands of the government. But it wasn’t better. The income of the wealthy grew as they pocketed the tax cuts, but workers experienced stagnant wages, a recession that hit working class households particularly hard, and intense pressure to cut important social programs.
Despite their failed promises, the Republican Party is asking that we extend the tax cuts for the wealthy, and some are even calling for further reductions in tax rates. However, if the Republican Party is truly the party of business, then surely it will understand that no responsible financial institution would continue to invest in a business that failed meet, or even come close to the growth and revenue projections that justified the investment in the first place. The payoffs from tax cuts that were promised during the Bush years have not been realized, and the failed promises about growth and revenue have damaged the health, education, and retirement programs the working class depends upon in our increasingly globalized economy.
A true party of business would end our investment in the false promise of supply-side economics. However, a party with a goal of reducing the scale of programs such as Social Security and Medicare along with delivering tax cuts to wealthy political backers would use arguments about the economic effects of tax cuts to disguise its true intentions. Which description fits best? Many Republicans still claim that tax cuts for the wealthy enhance economic growth despite the evidence to the contrary, but it’s rare to hear a Republican admit that these supply-side policies have failed.
The Republican Party has long promoted itself as the party of business. Republicans understand the needs of business, we are told, and if the country would leave the economy in their hands business would boom. All we need to do is to give those at the very top of the income distribution – the “job creators” – more income through tax breaks, and then sit back and wait for the magic happen. Our investment in the wealthy will produce remarkable economic growth, and everyone will be better off.
The Bush tax cuts were a test of these claims about supply-side economic policies. To justify the tax cuts the nation was, in effect, given a business prospectus from the Republican Party. We were promised that cutting taxes on the wealthy would result in much higher economic growth and broadly shared prosperity. For those who wondered how we would pay for such a large cut to the government’s revenue stream, the Republican prospectus had a remarkable claim. The tax cuts wouldn’t cost us anything. Growth would be so strong that the tax cuts would more than pay for themselves. Even those who admitted that the tax cuts might not be fully self-financing still made strong claims about faster economic growth offsetting much of the lost revenue from the tax cuts.
The reality, of course, has been quite different. There is little evidence that the Bush tax cuts, or any other tax cuts directed at the so-called job creators, have had a noticeable effect on economic growth. And the promise of broadly shared prosperity has not been realized. Most of the gains from economic growth in recent decades have gone to the top of the income distribution while the inflation adjusted wages of the working class have been relatively flat. Furthermore, the tax cuts have not paid for themselves as promised, and it hasn’t even been close. The Bush tax cuts have already cost us trillions in revenue, and if they are extended for high income tax payers, they will cost us roughly another trillion over the next decade.
The failure of Republicans to deliver on their promise that tax cuts would be mostly self-financing is a large factor in the deterioration in our long-run fiscal outlook, and it is putting considerable pressure on programs such as Social Security. In fact, the Bush tax cuts can be thought of as a loan from the Social Security Trust Fund that was supposed to be paid back with the revenues from higher economic growth, a loan that is presently in default.
To see this, recall that the government began intentionally collecting a surplus from the Social Security program beginning in 1983 in order to prefund the retirement needs of baby boomers. The idea was to run a surplus for several decades while the baby-boomers were still working to get ready for the deficit years the system would experience after they retired.
The revenue from Social Security over and above what was needed to fund payouts reduced the overall government debt and allowed taxes to be lower than they could have been without these surplus funds. For example, the surplus that Bush inherited from the Clinton administration was largely due to the Social Security Trust Fund, and Bush argued it would be better to give this surplus to the private sector through tax cuts than to leave it in the hands of the government. But it wasn’t better. The income of the wealthy grew as they pocketed the tax cuts, but workers experienced stagnant wages, a recession that hit working class households particularly hard, and intense pressure to cut important social programs.
Despite their failed promises, the Republican Party is asking that we extend the tax cuts for the wealthy, and some are even calling for further reductions in tax rates. However, if the Republican Party is truly the party of business, then surely it will understand that no responsible financial institution would continue to invest in a business that failed meet, or even come close to the growth and revenue projections that justified the investment in the first place. The payoffs from tax cuts that were promised during the Bush years have not been realized, and the failed promises about growth and revenue have damaged the health, education, and retirement programs the working class depends upon in our increasingly globalized economy.
A true party of business would end our investment in the false promise of supply-side economics. However, a party with a goal of reducing the scale of programs such as Social Security and Medicare along with delivering tax cuts to wealthy political backers would use arguments about the economic effects of tax cuts to disguise its true intentions. Which description fits best? Many Republicans still claim that tax cuts for the wealthy enhance economic growth despite the evidence to the contrary, but it’s rare to hear a Republican admit that these supply-side policies have failed.
And it is true that since supply-side became ascendant the fruits of additional GDP growth have become more and more concentrated in the upper income levels.
Since when was supply-side ever really in place? Sure, Reagan talked about it, but was it ever really implemented properly?
The Bush tax cuts were not a test of supply side economics. There were no tax cuts. All spending is paid for one way or another and Bush jacked up spending.
He was a Keynesian.
You fool, the country was screwed yet again by Keynesian manipulations and you blame it on Supply side.
Blind ignorant fool.
That sounds suspiciously like the claim that communism was never implemented properly.
Supply side did fine for a while. But all economic methods have weaknesses and the longer you run under the theory the more pain those weaknesses stack up and drag the economy down. We should have bailed on supply side by the end of Bush 1’s term.
Communism can never be implemented “properly” because it goes against human nature...Supply-Side acknowledges human nature and incorporates it into it.
Now you just sound desperate.
“There is little evidence that the Bush tax cuts, or any other tax cuts directed at the so-called job creators, have had a noticeable effect on economic growth.”
Nonsense.
Perhaps you have an empirical study that does show a statistically significant link between marginal rates and GDP growth?
Now you just sound like a troll.
Here are a couple of books that might help:
Yeah, stay classy.
When you have the mainstream media blaming everything going bad in America on the Republicans and hidding and shielding every evil by O’bummer, what can you expect?
The Repubicans in Congress had just better nuckle down and do the right thing, no matter what, instead of trying to protect their cushy jobs. They’re going to get blamed what ever bad happens anyway. So, if there is no more Republicans, who then can they blame if the country goes to hell as it is doing right now? Maybe then the people in this country will start wising up and throw the bastards out, including their media. Then, it will time for a Revolution.
The evidence is clear from the government data. You can start by reading this.
“The post-tax-cut surge in economic growth and tax revenues helped drive down the deficit from 3.5% of gross domestic product in 2004 to 2.6% in 2005, to 1.9% in 2006 and to a manageable 1.2% in 2007.”
Read More At IBD: http://news.investors.com/ibd-editorials-perspective/113012-635352-bush-tax-cuts-did-not-cause-deficits.htm#ixzz2E6MZRQKP
As for wealth concentration, can you show me the evidence where the middle and lower class is worse off than they were 50 years ago? Everyone of them have heated/air conditioned homes, cars, flat screen tvs, phones etc.?
If the marginal rate is 100% how much growth do you think we’d have?
Is it just a coincidence that marginal rates dropped in the 60’s and 70’s and the economy boomed?
Get thee to Daily Kos, troll.
He/she/it IS a troll.
Seen it here posting like a goofball before.
I only had to read a couple of lines of this article. You waste your time reading the rest. Does Barack Obama like lots of money for himself? Does Hillary Clinton like lots of money for herself? Does Harry Reid like lots of money for himself? Does Nancy Pelosi like lots of money for herself? I have a grudging respect for Mao. At least he had to go on a long hike and cut some throats before he pulled the big con of tyranny masquerading as socialism on the Chinese. Our tyrants just go to law school and then become Democrats and then try to foist tyranny on us masquerading as socialists. They don’t even take a good hike, first.
"Now?" This troll's been shopping the leftist line for a while.
Revisionist history, as far as I know. The Bush tax cuts generated decent economic growth, low unemployment, and improving government revenues during the period after they were fully enacted (2004-2006), and that was coming off the dot-com crash and 9/11. The Dem’s took over Congress in 2007, and that’s when things started heading in the other direction, greatly accelerated by the election of Obama and the Dem supermajority in 2008.
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