enlarge

Credit: ThinkProgress

When President Obama on Tuesday declared that decades of Republican trickle-down economics "never worked," conservatives were predictably apoplectic.

But for all of their protests of "class warfare", "socialism" and worse, Obama was being kind to the Republican ideologues. After all, as the historical record shows, from economic growth and job creation to stock market performance and just about every other indicator of the health of American capitalism, the modern U.S. economy has almost always done better under Democratic presidents. Despite GOP mythology to the contrary, America generally gained more jobs and grew faster when taxes were higher (even much higher) and income inequality lower. And while the U.S. recovery from the Bush recession remains painfully slow, most economists - including the nonpartisan CBO and some of John McCain's own 2008 advisers - believe President Obama saved it from the abyss.

(Click a link below for the details on each.)

• Job Creation and Economic Growth
• The Stock Market
• Income Inequality
• National Debt
• The Bush Recession and the Obama Recovery

Job Creation and Economic Growth

To be sure, George W. Bush provided the perfect bookend to era of modern Republican economic management ushered by Herbert Hoover. The verdict on President Bush's reign of ruin was pronounced even before Barack Obama took the oath of office. Just days after the Washington Post documented that George W. Bush presided over the worst eight-year economic performance in the modern American presidency, the New York Times on January 24, 2009 featured an analysis ("Economic Setbacks That Define the Bush Years") comparing presidential performance going back to Eisenhower. As the Times showed, George W. Bush, the first MBA president, was a historic failure when it came to expanding GDP, producing jobs and fueling stock market growth.

On January 9, 2009, the Republican-friendly Wall Street Journal summed it up with an article titled simply, "Bush on Jobs: the Worst Track Record on Record." (The Journal's interactive table quantifies his staggering failure relative to every post-World War II president.) The meager one million jobs created under President Bush didn't merely pale in comparison to the 23 million produced during Bill Clinton's tenure. In September 2009, the Congressional Joint Economic Committee charted Bush's job creation disaster, the worst since Hoover:

Continue reading »

DOWNLOADS: (444)

PLAYS: (3390)

Embed

Back in August, Americans learned that among Rick Perry's miserable grades in college was a "D" in "Principles of Economics." Now we know why. His contribution to the GOP's flat tax one-upsmanship not only fails to simply the U.S. tax code. As it turns out, Governor Perry's "Cut, Balance and Grow" scheme would undermine Social Security, produce mountains of debt and require draconian spending cuts, all while ensuring a massive windfall for the wealthy.

On that last point, the Texas Governor is honest and untroubled. At a time of record income inequality, Perry told CNBC's John Harwood he was unconcerned that the richest Americans would receive "hundreds of thousands, maybe even millions of dollars" as a result of his tax plan:

"But I don't care about that. What I care about is them having the dollars to invest in their companies."

And to be sure, Rick Perry wants to ensure that the wealthy have more dollars - a lot more. His optional 20% flat tax rate would allow the top income earners to pay Uncle Sam at a much lower rate than the already low 35% level they pay currently. And Perry would not merely eliminate the estate tax, he would zero out the capital gains tax as well. As the Washington Post recently explained, "For the very richest Americans, low tax rates on capital gains are better than any Christmas gift":

While it's true that many middle-class Americans own stocks or bonds, they tend to stash them in tax-sheltered retirement accounts, where the capital gains rate does not apply. By contrast, the richest Americans reap huge benefits. Over the past 20 years, more than 80 percent of the capital gains income realized in the United States has gone to 5 percent of the people; about half of all the capital gains have gone to the wealthiest 0.1 percent.

While Perry's plan delivers a gargantuan payday for the gilded class, it fails in its supposed objective to simplify the tax code. After all, by "giving Americans a choice between a new, flat tax rate of 20% or their current income tax rate," taxpayers need to figure out their own return twice in order to decide which options benefits them most. And the lower payments they would choose to make, combined with the loss of revenue from the estate tax, the capital gains tax and a corporate tax slashed from 35 percent to 20 percent, means that Rick Perry's would literally drain trillions from the U.S. Treasury in the decades to come.

But like his windfall for the wealthy, that's OK with Rick Perry, too.

Continue reading »

DOWNLOADS: (184)

PLAYS: (1007)

Embed

On Thursday, House Speaker John Boehner took Barack Obama to task for the President's claim that he had not yet seen a jobs plan from Republicans. "I want to make sure," Boehner lectured the President, "you have all the facts."

As it turns out, this is one of those rare occasions where John Boehner is right. After all, that same day Boehner's Republican colleagues in the Senate introduced their own GOP jobs plan titled the "Jobs Through Growth Act." Of course, President Obama could be forgiven for assuming the GOP had nothing new to say on the subject of the economy. Because as a quick glance reveals, John McCain's new "Jobs Through Growth Act" like Eric Cantor's "House Republican Plan for America's Job Creators" is just a cynical rehash of the same tried and untrue policies the GOP has been pushing for years.

That the Senate Republicans' ersatz plan is a merely a repackaging of a years-old Republican wish list is apparent from the description on John McCain's web site. It's not merely a litany of existing GOP legislation; the call for upper class tax cuts, cutting federal regulations and tort reform could have come straight out of George W. Bush's 2000 campaign playbook. And the demands for steep spending cuts, a balanced budget amendment, 25% tax rates for individuals and corporations and the repeal of the Affordable Care Act are just a copy and paste from the Republicans' Ryan budget, the GOP "Pledge to America", the Tea Party "Contract from America" and other recent conservative manifestoes mercifully consigned to the dustbin of history.

Of course, if you think you've heard this story before, that's because you have.

Continue reading »

If nothing else, Herman Cain is a man who is very sure of himself. This week, Cain once again declared God told him to run for President. But on the same day Senate Republicans continued their unprecedented obstructionism by blocking President Obama's jobs bill, Cain's own 9-9-9 plan finally started to come under scrutiny. As it turns out, Cain's simple scheme -like virtually every other recent GOP proposal - would produce mountains of debt and massively shift the tax burden to middle class Americans as the wealthy received yet another windfall from the U.S. Treasury.

Of course, you'd never know from Cain's confident prediction during Tuesday night's Bloomberg GOP presidential debate. His prescription?

Two things. Present a bold plan to grow this economy, which I have put my 9-9-9 plan on the table, and it starts with throwing out the current tax code and putting in the 9-9-9 plan.

Secondly, get serious about bringing down the national debt. The only way we're going to do that is, the first year that I'm president and I oversee a fiscal year budget, make sure that revenues equals [sic] spending. If we stop adding to the national debt, we can bring it down.

The former pizza magnate might want to check his math. Because even Herman Cain never cut a slice so big.

To "make sure that revenues equal spending," Herman Cain would have to cut roughly $1.8 trillion (or 47 percent!) from the nation's $3.8 trillion budget. Because as Bloomberg News explained, Cain's two-step plan to blow up the current income tax, end both the capital gains and estate taxes and replace them with flat 9 percent individual, corporate and sales tax rates would unleash new rivers of red ink:

Following the broad contours of Cain's plan, the U.S. would have collected almost $2 trillion in 2010, according to a Bloomberg News calculation based on data from the Commerce Department's Bureau of Economic Analysis. The U.S. actually collected almost $2.2 trillion that year, according to the White House Office of Management and Budget...

Using 2010 figures, Cain's plan would have collected $922.1 billion in revenue from the national sales tax with no exemptions, $912.7 billion at a 9 percent individual income tax with few deductions or other tax benefits, and $127.7 billion from a 9 percent tax on U.S. corporate income with no deductions.

The federal government in 2010 actually collected $898.5 billion from individuals, including levies on capital gains; $191.4 billion from the corporate income tax; $864.8 billion from Social Security and retirement taxes; $141 billion in other taxes, such as estate and gift taxes; and $66 billion in excise taxes. This doesn't include the taxes levied by states on retail sales and property.

If anything, Bloomberg's analysis understates the magnitude of the revenue problem. For example, in pre-recession 2007, total tax revenue was $2.6 trillion. The Center for American Progress estimated Cain's 9-9-9 plan would have brought in only $1.3 trillion and thus "cut federal revenue in half." It's no wonder CAP's Michael Linden concluded President Cain's would be "bigger than any deficit since WWII, including the deficits of the past three years."

But that's hardly the only poison in pizza man Herman Cain's secret sauce for Americans.

As Center for American Progress Vice President for Economic Policy Michael Ettlinger put it:

"[Herman Cain's 9-9-9 plan] would be the biggest tax shift from the wealthy to the middle-class in the history of taxation, ever, anywhere, and it would bankrupt the country."

Because Cain's 9 percent national sales tax makes no mention of a personal exemption, as economists including former Reagan Treasury official Bruce Bartlett:

This means that the 47 percent of tax filers who now pay no federal income taxes will pay 9 percent on their total income. And elimination of the payroll tax won't even help half of them because the earned income tax credit, which Mr. Cain would abolish, offsets both their income tax liability and their payroll tax payment as well.

Continue reading »

enlarge

Credit: Center on Budget and Policy Priorities

Over the past few weeks, the political chattering classes have been abuzz over 2012 GOP frontrunner Rick Perry's claim that Social Security is a "Ponzi scheme." (It isn't.) But largely overlooked in the parsing and the polls is the ocean of red ink the various Republican Social Security privatization schemes would inevitably produce. More than a decade after George W. Bush first proposed them, there's no escaping the fact that private accounts would divert trillions of dollars from Social Security and thus build a new mountain of federal debt.

It is important to note for starters that Social Security is not in crisis, despite Perry's claims that the system is "a monstrous lie" and "bankrupt." With a $2.5 trillion surplus, as the New York Times noted, "Government projections have Social Security exhausting its reserves by 2037, absent any changes, but show that the payroll tax revenues coming in would cover more than three-quarters of benefits to recipients then." With simple changes to benefits, eligibility and most importantly, funding, Social Security can easily be made sound for generations to come. Citizens for Tax Justice and the New York Times each estimated that extending the payroll tax to income over $250,000 a year (as candidate Obama and Vermont Senator Bernie Sanders proposed) would deliver about $50 billion annually in new revenue for the Treasury. And as the Times suggested in November, the move is long overdue:

When the payroll tax - which finances Social Security and Medicare - was created, it covered 90 percent of all income. Today, with a ceiling at $106,800, it covers closer to 80 percent.

Nevertheless, as the AP reported Saturday, when it comes to Americans' retirement security, Republican presidential candidates are returning to a bad idea whose time never came.

Most of the top Republicans running for president are embracing plans to partially privatize Social Security, reviving a contentious issue that fizzled under President George W. Bush after Democrats relentlessly attacked it...

Former Massachusetts Gov. Mitt Romney has a version. Reps. Michele Bachmann of Minnesota and Ron Paul of Texas have said younger workers should be allowed to invest in alternative plans. Texas Gov. Rick Perry has raised the idea of letting whole groups, such as state and local government workers, opt out of Social Security.

These proposals are popular among conservatives who believe workers could get a better return from investing in publicly traded securities. But most in the Republican race have been careful to say they would fight to preserve traditional Social Security for current retirees and those approaching retirement. Younger workers, they say, should have more options.

Continue reading »

enlarge

Credit: Deloitte

Click here for larger image.

Judging from the furious reaction of some of the gilded-class crowd and their Republican protectors, billionaire Warren Buffett struck a nerve with his plea to Congress to "stop coddling the super-rich." Former American Express CEO, Harvey Golub and tea party sugar daddy Charles Koch were quick to protest respectively "the unfair way taxes are collected" and that "my business and non-profit investments are much more beneficial to societal well-being than sending more money to Washington." Meanwhile, House Majority Leader Eric Cantor attacked President Obama's "efforts to incite class warfare."

Of course, a truism of American politics is that the side decrying the class war is the one winning it. And at a time when the federal tax burden is at its lowest in 60 years and income inequality at its highest level in 80, Republicans would still rather wave the unbloodied shirt of class warfare than ask what America's rich and famous can do for their country.

That became abundantly clear during the debt ceiling crisis Republicans manufactured. Weeks before Cantor's Sunday op-ed in the Washington Post accused President Obama of class warfare and a desire to "make it harder to create jobs," his GOP colleagues were already singing from the same hymnal. Senators Dan Coats (R-IN) and Kelly Ayotte (R-NH) quickly called a proposed $4 trillion debt reduction deal 17 percent of which came from new revenues "class warfare." Utah's Orrin Hatch wasn't content to lament "the usual class warfare the Democrats always wage." The poor, Hatch insisted, "need to share some of the responsibility." As for a Senate resolution asking the same of millionaires, Alabama Republican Jeff Sessions said that was "rather pathetic."

Of course, what is really pathetic is the declining tax burden on the small slice of Americans now taking an ever-larger piece of the economic pie.

Even after extorting in December a two-year extension to the upper-income Bush tax cuts and steep reductions in the estate tax impacting only 0.25 percent of families, Republicans refused to countenance a dime of new tax revenue as the debt ceiling debate began. First Eric Cantor and then John Boehner walked out of the debt compromise discussions with President Obama for the same reason. As Boehner put it in his national address in July, "I know those tax increases will destroy jobs."

Back in May, John Boehner explained to CBS News who Republicans would be trying to protect during the debt ceiling negotiations with President Obama:

"The top one percent of wage earners in the United States...pay forty percent of the income taxes...The people he's talking about taxing are the very people that we expect to reinvest in our economy."

If so, those expectations were sadly unmet after the tax cuts of George W. Bush. After all, the last time the top tax rate was 39.6 percent during the Clinton administration, the United States enjoyed rising incomes, 23 million new jobs and budget surpluses. Under Bush? Not so much.

On January 9, 2009, the Republican-friendly Wall Street Journal summed it up with an article titled simply, "Bush on Jobs: the Worst Track Record on Record." (The Journal's interactive table quantifies his staggering failure relative to every post-World War II president.) The meager one million jobs created under President Bush didn't merely pale in comparison to the 23 million produced during Bill Clinton's tenure. In September 2009, the Congressional Joint Economic Committee charted Bush's job creation disaster, the worst since Hoover:

Continue reading »

enlarge

As the New York Times reported Sunday, within the Obama White House a fierce debate is raging about what to do next about jobs and the economy. But on the same day Americans learned advisers David Plouffe and Bill Daley are pushing President Obama to put forward only proposals which can pass Congress as part of his continuing quixotic quest for the political center, the Times' Sheryl Gay Stolberg became the latest to document that it no longer exists.

Which is one more reason why President Obama not only must aggressively promote the job creation programs America are so desperate for. He should take a page from the GOP playbook while doing so. After all, the same Republicans who claimed the economy was the party's "number one priority" immediately pushed draconian anti-abortion restrictions, a stillborn repeal of the health care reform law and a disastrous balanced budget amendment they knew would never become law.

It's time for Barack Obama to start making Republicans offers they can't refuse. And if they do, they'll be on record for having said no to the economic recovery measures the American people so badly need.

1. The States' Rights Act. Republicans claim to love states' rights. Among them should be the right to get help from Washington to limit the cataclysmic budget shortfalls and layoffs now gripping cash-strapped state and local governments. The States' Rights Act would do just that.

Continue reading »

That all six of the Republicans selected to the Congressional debt reduction "Super Committee" are signers of Grover Norquist's anti-tax pledge is hardly surprising. But the choice of Arizona Senator Jon Kyl, is an especially fitting one for the GOP. After all, Kyl didn't merely define a generation of Republican talking points when he explained earlier this year that his was "not intended to be a factual statement." As it turns out, from regurgitating bogus claims that "tax cuts pay for themselves" and spur "job creators" to his war on the estate tax, Jon Kyl has long been a leading fabricator of GOP tax cut myths. And when it comes to super lies on taxes, his fellow Republican super committeemen are not far behind.

In June, the second ranking Senate Republican joined House Majority Leader Eric Cantor in walking out of debt reduction talks led by Vice President Biden because of their refusal to accept even a dime of new tax revenue. As Jon Kyl explained last summer (starting around the 1:20 mark above), tax cuts don't increase the national debt:

"You do need to offset the cost of increased spending, and that's what Republicans object to. But you should never have to offset cost of a deliberate decision to reduce tax rates on Americans."

Kyl's was just the latest repackaging of President Bush's long ago debunked claim that "you cut taxes and the tax revenues increase." Texas Senator Kay Bailey Hutchison parroted that line, "Every major tax cut we've had in history has created more revenue." Then House Minority Leader John Boehner agreed, insisting last June that the Bush tax cuts had nothing to do with the depleted U.S. Treasury, "It's not the marginal tax rates ... that's not what led to the budget deficit. The revenue problem we have today is a result of what happened in the economic collapse some 18 months ago." For his part, Senate Minority Leader Mitch McConnell rushed to defend Kyl's fuzzy math:

"There's no evidence whatsoever that the Bush tax cuts actually diminished revenue. They increased revenue because of the vibrancy of these tax cuts in the economy. So I think what Senator Kyl was expressing was the view of virtually every Republican on that subject."

Continue reading »

enlarge

Credit: New York Times

(Click here for larger image.)

If nothing else, the debt ceiling crisis provided what Barack Obama is so fond of calling a "teachable moment." Hopefully, that extends to the President himself. After seeing his nominees blocked, his legislation filibustered and popular upper-income tax increases delayed by Republicans who withheld their support from his watered down stimulus and health care programs, President Obama nevertheless continued to seek common ground with those whose only goal remains his political destruction. The result was as painful as it was predictable.

As for the rest of us, here are 25 things we learned during the debt crisis.

(1) We learned that Republicans really care about the national debt, but only when a Democrat is in the White House. As Dick Cheney put it, "Reagan proved deficits don't matter."

(2) We learned that the national debt tripled under Ronald Reagan, forcing him to raise the debt ceiling 17 times. Overwhelmed by the torrents of red ink unleashed by his supply-side tax cuts of 1981, Reagan raised taxes eleven times while in office. (His deficit reduction initiatives of 1982, 1984 and 1987 relied on over 75% in new tax revenue.) It's no wonder Reagan called the mountain of debt he bequeathed to America his greatest regret.

(3) We learned that George W. Bush nearly doubled the national debt, leaving Barack Obama a $1.2 trillion annual deficit and almost $11 trillion in debt on January 20, 2009.

(4) We learned that the Bush tax cuts were the single biggest factor in erasing the projected surpluses Dubya inherited from Bill Clinton. The Bush tax cuts of 2001 and 2003 accounted for almost half of the red ink during his tenure, and if made permanent, would contribute more to the debt over the next decade than Iraq, Afghanistan, the recession, the stimulus and TARP combined.

(5) We learned that tax cuts don't "pay for themselves" or "always increase revenues." Only in 2005 did federal tax revenue reach the pre-Bush tax cut levels of 2000.

(6) We learned that the Republicans' so-called job creators don't create jobs when their taxes are low. In fact, the data show that the far more jobs were created and the economy grew much more quickly when the top 1% of income earners paid higher - even much higher - taxes.

(7) We learned that for John Boehner, some "spending binges" are more equal than others. While spending under Barack Obama rose by about 10% from George W. Bush's last budget in FY 2009, federal outlays almost doubled between 2001 and 2009. As it turns out, the two unfunded wars in Afghanistan and Iraq, the budget-busting Bush tax cuts of 2001 and 2003 (the first war-time tax cut in modern U.S. history) and the Medicare prescription drug program drained the U.S. Treasury. Mitch McConnell, John Boehner and Eric Cantor voted for all of it.

(8) We learned that Republicans have short memories. When Eric Cantor complained recently that "what I don't think the White House understands is how difficult it is for fiscal conservatives to say they're going to vote for a debt ceiling increase," he apparently forgot that Republican majorities voted seven times to raise the debt limit under President Bush. Along with John Boehner, Mitch McConnell and Jon Kyl, Cantor and the current GOP leadership team voted a combined 19 times to increase George W. Bush's borrowing authority by $4 trillion. (That vote tally included a "clean" debt ceiling increase in 2004, backed by 98 current House Republicans and 31 sitting GOP Senators.)

(9) We learned that Republicans are bad at genetics, too. Last Friday, Texas Rep. Jeb Hensarling claimed that for Republicans, raising the debt ceiling is "contrary to our DNA."

(10) We learned that in rare moments of candor, Republicans can speak the truth. In January, Speaker Boehner acknowledged that failure to raise the debt ceiling would cause "financial disaster." And Utah Senator Orrin Hatch explained that when President Bush was in the White House, for Republicans "it was standard practice not to pay for things."

Continue reading »

enlarge

Credit: New York Times

(Click here for larger image.)

"In Washington more spending and more debt is business as usual," House Speaker John Boehner declared on Monday before warning, "I've got news for Washington - those days are over." The days, Boehner should have explained, before Barack Obama took the oath of office. As Sheldon Whitehouse (D-RI) rightly pointed on the Senate floor last year, "We would have none of this if it hadn't been for the Republican debt orgy that they went through." Which is exactly right. As a few handy charts show, Republican presidents and the current GOP leadership in Congress presided over that debt debauchery. And now they demand Democrats clean up their mess.

In case Americans had forgotten that Ronald Reagan tripled the national debt and George W. Bush doubled it, the New York Times presented the helpful reminder above.

For their part, Republicans want to pretend history began on January 20, 2009. While Texas Rep. Jeb Hensarling claimed Friday that for Republicans raising the debt ceiling is "contrary to our DNA," House Minority Leader Eric Cantor protested two weeks ago, "I don't think the White House understands is how difficult it is for fiscal conservatives to say they're going to vote for a debt ceiling increase."

As McClatchy showed, Republicans are as bad at genetics and history as they are at economics:

Continue reading »