So it's come down to this. On Saturday, David Stockman, the legendary Reagan budget chief who presided over the Gipper's supply-side tax cuts, announced that the "debt explosion has resulted not from big spending by the Democrats, but instead the Republican Party's embrace, about three decades ago, of the insidious doctrine that deficits don't matter if they result from tax cuts." The next day, the former Fed chairman Alan Greenspan, who famously helped sell the 2001 Bush tax cuts to Congress, declared them simply "disastrous."
Sadly, Stockman and Greenspan are just about the only voices in the Republican Party speaking the truth about the fiscal devastation wrought by the expiring Bush tax cuts. After all, the national debt tripled under Ronald Reagan, only to double again during the tenure of George W. Bush. And as it turns out, the Bush tax cut windfall for the wealthy accounted for almost half the budget deficits during his presidency and, if made permanent, would contribute more to the U.S. budget deficit than the Obama stimulus, the TARP program, the wars in Afghanistan and Iraq, and revenue lost to the recession - combined. Of course, you'd never know it listening to the leaders of GOP.
And that's just the beginning. Here, then, are 10 Republican Lies about the Bush tax cuts:
- Lie #1: Democrats Plan Across the Board Tax Hikes on January 1st
- Lie #2: Democrats Want a $3.8 Trillion Tax Increase
- Lie #3: Tax Cuts Pay for Themselves
- Lie #4: The Bush Tax Cuts Didn't Add to the Deficit
- Lie #5: Expiring High Income Tax Cuts Will Hurt Small Business
- Lie #6: The Estate Tax Devastates Small Businesses and Family Farms
- Lie #7: The Bush Tax Cuts Helped All Americans
- Lie #8. Extending Bush Tax Cuts for the Wealthy is the Best Way to Stimulate the Economy
- Lie #9. Bush Tax Cuts Produced 52 Straight Months of Job Growth
- Lie #10: The Rich Pay Too Much in Taxes Already
For the details, data and charts for each, continue reading after the break.
On July 19, Michigan Republican Dave Camp sent out an email blast warning of the "Democrats' ticking tax time bomb" claiming "Americans to pay higher taxes starting January 1, 2011." On July 20, Rep. Mike Pence (R-IN) declared, "Should Democrats get their way, every income tax bracket will increase on Jan. 1, 2011. Every single one."
It's no wonder Politifact deemed the charge "False." As the fact checking site put it:
"For many months, Democratic officials have consistently said that they intend to let only the tax cuts for the wealthiest individuals lapse. The cutoff they usually suggest is $200,000 for individuals and $250,000 for married couples filing jointly. President Obama campaigned on just such a plan."
Which is exactly right. During the 2008 campaign, candidate Obama pledged to roll back the Bush tax cuts for couples earning over $250,000 a year while delivering tax relief for 95% of working households. President Obama has already delivered on the second promise. (Ironically, and despite the Tea Party's rage, total federal, state and local taxes hit their lowest level since 1950.) Last week, Treasury Secretary Tim Geithner confirmed Obama's intent to make good the first:
"We believe it is appropriate to let those tax cuts that go to the most fortunate expire."
The shrill voices of the GOP aren't merely lying on this point. The expiring Bush tax cuts of 2001 and 2003, were after all, passed by a Republican Congress and signed by a Republican President. As Ezra Klein recently put it, "Republicans now blaming Democrats for Bush tax cuts."
On Sunday, Palin literally wrote that talking point on her hand in an appearance with Chris Wallace of Fox News:
"My palm isn't large enough to have written all my notes down on what this tax increase, what it will result in.... Democrats are poised to cause the largest tax increase in U.S. history, it's a tax increase of $3.8 trillion in the next ten years and it will have an effect on every single American who pays an income tax."
Of course, this second Republican fraud is merely the flip-side of the first. Restoring upper bracket tax rates to their Clinton-era levels will impact only a sliver of American taxpayers. As ThinkProgress noted:
For one thing, according to the Pew Economic Policy Group, an extension of all of the Bush tax cuts will cost $3.1 trillion over ten years, once the costs of servicing the debt are factored in. But no one has proposed allowing them all expire, and it's incredibly disingenuous of Republicans to claim otherwise, especially since it was a budget gimmick by former President George W. Bush to include the ten-year sunset at all.
Extending just the cuts for the wealthiest two percent of Americans will cost $830 billion over ten years.
But even that cost is one Republicans refuse to pay. As Jon Kyl, the second-ranking Senate Republican, told Chris Wallace three weeks ago:
"[Y]ou should never raise taxes in order to cut taxes," Jon Kyl said on Fox News Sunday. "Surely Congress has the authority, and it would be right to -- if we decide we want to cut taxes to spur the economy, not to have to raise taxes in order to offset those costs. 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."
Three days later, Minority Leader Mitch McConnell (R-KY) explained how his party miraculously turns bulls**t into gold:
"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."
It's no wonder, as Ezra Klein joked, that If a Democrat said something like that, "He'd be laughed out of the room."
But how about the Congressional Budget Office's estimations? "The new CBO data show that changes in law enacted since January 2001 increased the deficit by $539 billion in 2005. In the absence of such legislation, the nation would have a surplus this year. Tax cuts account for almost half -- 48 percent -- of this $539 billion in increased costs." How about the Committee for a Responsible Federal Budget? Their budget calculator shows that the tax cuts will cost $3.28 trillion between 2011 and 2018. How about George W. Bush's CEA chair, Greg Mankiw, who used the term "charlatans and cranks" for people who believed that "broad-based income tax cuts would have such large supply-side effects that the tax cuts would raise tax revenue." He continued: "I did not find such a claim credible, based on the available evidence. I never have, and I still don't."
Of course, McConnell and Kyl were simply joining Judd Gregg, Tom Coburn, Marco Rubio, Carly Fiorina, Kay Bailey Hutchison and the rest of the new Republican alchemists selling Arthur Laffer's supply-side snake oil. Even John McCain, who voted against the 2001 Bush tax cuts, got the religion just in time for the 2008 Republican primaries, arguing "Tax cuts, starting with Kennedy, as we all know, increase revenues."
But it was House Minority Leader John Boehner (R-OH) who offered the purest expression of that fantasy in defending the Bush tax cuts:
"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."
"We've seen over the last 30 years that lower marginal tax rates have led to a growing economy, more employment and more people paying taxes."
As it turned out, not so much.
The Center on Budget and Policy Priorities demolished the mythology promoted by President Bush ("You cut taxes and the tax revenues increase") and the usual suspects on the right. CBPP found that Bush tax cuts accounted for almost half of the mushrooming deficits during his tenure:
And as another recent CBPP analysis revealed, over the next 10 years, the Bush tax cuts if made permanent will contribute more to the U.S. budget deficit than the Obama stimulus, the TARP program, the wars in Afghanistan and Iraq, and revenue lost to the recession put together.
The Bush tax cuts didn't come anywhere close to paying for themselves. And making them permanent is the very worst thing the so-called deficit hawks could do to reduce the U.S. debt.
As Senator Orrin Hatch (R-UT) complained, allowing the Bush cuts to lapse for the wealthiest Americans would amount to "a job-killing tax hike on small business during tough economic times." Mike Pence echoed that argument, fretting "the idea that you would raise taxes on small businesses owners and job creators in the middle of this recession doesn't make any sense."
As it turns out, very few small business owners would be impacted.
John McCain introduced this fraud along with Joe the Plumber during the 2008 campaign. McCain proclaimed Obama's plan to restore Clinton-era tax rates for taxpayers making over $250,000 meant "the small businesses that we're talking about would receive an increase in their taxes right now." In February 2009, Senate Minority Leader Mitch McConnell (R-KY) regurgitated the long-debunked talking point:
"I don't think raising taxes is a great idea, and when our good friends on the other side of the aisle say raising the taxes on the wealthy, what they are really talking about is small business."
Of course, they're not talking about small business. As CNN concluded in October 2008, "fewer than 2% of small business owners would pay more under Obama's plan." But in case there was any doubt about the Republicans' deception on the point, the nonpartisan Tax Policy Center quickly put it to rest:
Out of 34.7 million filers with business income on Schedules C, E or F, 479,000 filers fall into the top two brackets, according to an analysis of projected 2009 filings by the nonpartisan Tax Policy Center.
The other 34.3 million - or 98.6% - would be unaffected by Obama's proposed rate hike.
In June, Florida Republican Senator George Lemieux summed up the impact of his party's successful effort to temporarily kill the estate tax in 2010. "The joke is don't go hunting with your children because right now there's no estate tax in this country this year." But the billions lost to the U.S. Treasury so that the heirs of billionaires could reap a staggering one-year windfall is no laughing matter.
The Republican scam over the so-called "death tax" is as bogus now as it was when President Bush first perpetrated it ten years ago. The "alternative" House GOP budget, fittingly unveiled by Rep. Paul Ryan on April Fool's Day 2009, would eliminate the estate tax altogether. While Nevada Senator John Ensign griped, "It destroys a lot of small businesses and a lot of family farms and ranches in America," House Minority Leader John Boehner (R-OH) groused:
"People who aren't wealthy, who may have built up value in land over generations and many family farms find themselves in situations where they've got to sell the farm in order the pay the taxes."
Sadly for conservative myth-makers, that claim, too, is completely false.
As the Washington Post explained, under President Obama's proposal (exempting couples with estates under $7 million with a 45 percent rate for amounts beyond that) 99.76% of estates would pay no taxes whatsoever. While CBPP estimated that only 1 in 500 estates is impacted by the current law, in 2009 the Tax Policy Center quantified just how few family farms or small businesses are actually impacted by the estate tax proposals under consideration:
We estimate that under the Obama proposal, 100 family farms and businesses would owe tax. (We define such estates as those where farm or business assets are valued at under $5 million and comprise the majority of estate assets.) The Lincoln-Kyl proposal would cut the number to 40. Even under current law, fewer than 2,700 family farms and businesses would owe tax.
And that wasn't good enough for Arizona's Jon Kyl, the second-ranking Republican in the Senate. Thanks to his obstructionism in December, the estate tax temporarily expired for one year as of January 1, 2010. (Barring new legislation in Congress, in 2011 the rate will jump back up to its pre-2001 Bush tax cut level of 55%, starting at $2 million per couple.) That could cost the U.S. Treasury billions this year. In the mean time, the message from the GOP to the wealthiest Americans is "die here, die now, pay less."
In February 2004, President Bush proclaimed, "we cut taxes, which basically meant people had more money in their pocket." Of course, some people are more equal than others.
As the Center for American Progress noted at the time, "for the majority of Americans, the tax cuts meant very little," adding, "By next year, for instance, 88% of all Americans will receive $100 or less from the Administration's latest tax cuts."
But that's just the beginning of the story. As the CAP also reported, the Bush tax cuts delivered a third of their total benefits to the wealthiest 1% of Americans. And to be sure, their payday was staggering. The Center on Budget and Policy Priorities detailed that by 2007, millionaires on average pocketed $120,000 from the Bush tax cuts of 2001 and 2003. Those in the top 1% stashed an extra $45,000 a year. As a result, millionaires saw their after-tax incomes rise by 7.6%, while the gains for the middle quintile and bottom 20% of Americans were a paltry 2.3% and 0.4%, respectively.
And as the New York Times uncovered in 2006, the 2003 Bush dividend and capital gains tax cuts offered almost nothing to taxpayers earning below $100,000 a year. Instead, those windfalls reduced taxes "on incomes of more than $10 million by an average of about $500,000." As the Times revealed in a jaw-dropping chart:
"The top 2 percent of taxpayers, those making more than $200,000, received more than 70% of the increased tax savings from those cuts in investment income."
In 1993, Senator Phil Gramm (yes, that Phil Gramm) said of President Clinton's proposal to raise top-bracket tax rates to help erase the Reagan-Bush deficits, "I believe hundreds of thousands of people are going to lose their jobs...I believe Bill Clinton will be one of those people." He was wrong on both counts.
Now, implicit in the Republican propaganda for making the Bush tax cuts permanent at a time of record income inequality is that more windfalls for the wealthy is the best way to stimulate the economy. As Florida GOP Senate hopeful Marco Rubio defended more tax cuts for the rich, "Jobs in America are created by people that have money or access to money."
Again, the numbers tell a different story.
Analyses from the Congressional Budget Office and former McCain economic adviser Mark Zandi concluded that upper class tax breaks provide just about the lowest return on investment (32 cents on the dollar) of any federal stimulus activity. As the Washington Post summed it up:
Why? As the CBO notes, most Bush tax cut dollars go to higher-income households, and these top earners don't spend as much of their income as lower earners. In fact, of 11 potential stimulus policies the CBO recently examined, an extension of all of the Bush tax cuts ties for lowest bang for the buck. (The CBO did not examine the high-income tax cuts separately, but the logic it used suggests that extending those cuts alone would have even less value.) The government could more effectively stimulate the economy by letting the high-income tax cuts expire and using the money for aid to the states, extensions of unemployment insurance benefits and tax credits favoring job creation. Dollar for dollar, each of these measures would have about three times the impact on GDP as continuing the Bush tax cuts.
It is true, as the New York Times and AP each reported over the last several days, that the recent decline in consumer spending among the richest 5% of Americans is contributing to the slowdown of the economic recovery. But giving them more money isn't the answer.
One month after the start of the recession which bears his name, President Bush in January 2008 proclaimed "America has added jobs for a record 52 straight months." Now, two and a half years later, former RNC chief Ed Gillespie is still bragging:
"The fact is, under the Bush tax cuts, we did have 52 months of-in uninterrupted job creation, longest in the history of the country."
While it is technically true the U.S. experienced moderate job growth between 2003 and 2007, the claim is also irrelevant.
The verdict on President Bush's reign of ruin was pronounced even before Barack Obama took the oath of office. 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 noted that "The Bush administration created about three million jobs (net) over its eight years, a fraction of the 23 million jobs created under President Bill Clinton's administration." 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 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.
But it was the release of a Census Bureau report last September ("Income, Poverty, and Health Insurance Coverage in the United States: 2008") which in 67 pages laid bare the economic devastation and human toll during the Bush presidency. As The Atlantic ("Closing The Book On The Bush Legacy") rightly noted, "It's not a record many Republicans are likely to point to with pride":
On every major measurement, the Census Bureau report shows that the country lost ground during Bush's two terms. While Bush was in office, the median household income declined, poverty increased, childhood poverty increased even more, and the number of Americans without health insurance spiked. By contrast, the country's condition improved on each of those measures during Bill Clinton's two terms, often substantially.
In February 2009, Minnesota Republican Congresswoman Michele Bachmann declared, "We're running out of rich people in this country." Just in time for tax day two months later, Bush flunkie Ari Fleischer comically expanded on that Republican meta myth.
Unsurprisingly, Fleischer took to the pages of the Wall Street Journal to make his plea on behalf of the nation's bedraggled wealthy. The top 10% of taxpayers, Fleischer argued, are "supporting virtually everyone and everything" and "their burden keeps getting heavier." As he put it:
"It's also what's called redistribution of income, and it is getting out of hand."
Oh, it's gotten out of hand all right. Just not, as the data make abundantly clear, in the direction Fleischer claims.
As for the richest 2% of Americans, they will pay more in income taxes if President Obama gets his way. But then again, the last time the top income tax rate was 39%, as it was under Bill Clinton, the United States enjoyed a booming economy, rising incomes, low unemployment and expanding budget surpluses. A booming economy, that is, for everyone.
UPDATE: Almost on cue, Eric Cantor on admitted the Bush tax cuts "dig the hole deeper" on the deficit, but supports making them permanent nevertheless. Meanwhile, Karl Rove doubled-down on the fraud that they led to "the largest amount of revenue being received by the government."
(This piece also appears at Perrspectives.)