Setting the Record Straight on The Bush Tax Cuts

Last night we had the pleasure on Pundit Review Radio to speak with one of our favorite liberal pundits Peter Beinart, editor at large of The New Republic and author of â??The Good Fight: How Liberals and Only Liberals Can Win the War on Terror and Make America Great Again.â? Peter was quite articulate and provided some salient advice to his fellow liberals that would serve them will politically if they choose heed his advice (which at this point does not seem even remotely likely.)

One of the issues that we only scratched the surface on was the Bush 2003 Tax Cuts. Peter claims in his book: â??the bottom has fallen outâ? with regards to the economy and pointed to, as evidence, declining real wages. Specifically he writes in his book:

…In the 1950s and 1960s, working and middle class Americans enjoyed the kind of job security that only college professors have now. Since then, the bottom has fallen out. The richest Americans have seen their family incomes continue to rise briskly. But for the poorest 40% of the population, income growth has slowed to a crawll.. (page 202-203)

Peterâ??s overriding assertion on the economic side is that the Reagan and Bush 43 Supply Side Tax Cuts have been abysmal failures-creating, in essence the “two-Americas” made popular by former Senator and VP candidate John Edwards. (Peter doesnâ??t mention the even deeper Kennedy Tax Cuts- but we can revisit that with Peter next time.) He claims what all liberals have been claiming all along- that supply side tax cuts are unfair, benefit the â??richâ? disproportionately, increase the deficit, cause inflation, divert money from government spending, etcâ?¦Even though he doesnâ??t directly call for â??rolling back the Bush Tax Cutsâ? in his book (i.e. raising taxes) I assume that he would support doing so to achieve more â??economic equality.â?

With all due respect to Peter and all liberals who canâ??t bring themselves to acknowledge the obvious- that supply side tax cuts like the 2003 Bush Tax Cuts have been enormously successful generating robust economic growth, jobs, higher standards of living across the board, and increasing amounts of wealth for all Americans regardless of socio-economic status, I feel compelled to set the record straight.

In response to the claim that The Bush Tax Cuts have only benefited the rich and that real wages have stagnated:2006 Q2 wages rose 4.6% the fastest quarterly pace since 1997.

According to the Treasury Dept analysis, wages after inflation rose by .7% in the 62 months from the peak of the last business expansion in March 2001 thru May 2006. (Superior to the 1.5% decline over the same stage of the business cycle from 1990-1995.)

The same Treasury Dept analysis showed a 7.4% gain in total worker comp (wages plus benefits) after inflation in the current expansion- much higher than the 2% gain over the same stage of the business cycle in the 1990s.

In response to the claim that the poor are shouldering more of the tax burden and that poverty has increased since the Bush Tax Cuts:
From 1979-2003 the total tax burden on the top quintile earning 52% of all income rose from 56% to 66% of all taxes.

From 2003-2006 the top quintileâ??s taxes paid rose to 85% from 66%. Talk about â??progressive.â?

On the spending side-anti-poverty spending rose from 8.1% of all federal spending in 1990 to a record 16.3% in 2004.

The people with the highest incomes continue to pay more of the taxes while the poor are receiving more of the spending. The exact opposite of what liberals claim.

Democrat Minority Leader Pelossi claimed the Bush Tax Cuts would â??damage long term economic growth.â? She like just about every other liberal in Congress who predicted that the next Great Depression was right around the corner were dead wrong.

Is this the â??damageâ? to which Minority Leader Pelossi was referring?

Since The Bush 2003 Tax Cuts on Capital, Dividends, and Personal Income:

1. The stock market recovered from its implosion in Clintonâ??s last year in office.
2. Unemployment is at 4.6% -lower than the avg during the Clinton â??boom yearsâ?
3. Over 5 million new jobs have been created since the 2003 Tax Cuts went into effect. Claims of a â??Jobless Recoveryâ? ring a bell?
4. GDP growth has averaged 3.9% since the Tax Cuts went into effect (well above post WW2 avg and twice the rate of growth in EurAbia.
5. Asset values from 2003-2006 in the U.S. have risen $13 trillion to close to $60 trillion. Thatâ??s $60,000,000,000,000.
6. The Top 3% (the â??Richâ?) have seen their tax payments increase at twice the rate of tax payments by everybody else.
7. The richest 3% pay nearly as much in income taxes as the other 97% of workers combined. The Bush Tax Cuts have soaked the RICH! Redistributionist liberals should be applauding.
8. Last year in 2005 tax revenues increased by $274 billion from 2004. We were told cutting taxes for the â??richâ? would decrease tax receipts to the treasury. The opposite occurred as it always has every time we have had across the board supply side tax cuts.
9. The first 7 months of 2006 tax revenues soared to over $1.5 trillion-$386 billion ahead of tax revenues for fiscal 2003 resulting in CBO lowering it deficit projections.

So in review the liberals predicted that the Bush Tax Cuts would:

Primarily â??benefit the rich.â? They were wrong. The Bush Tax Cuts were the most â??progressive in history.â?

Drain tax receipts to the treasury- They were wrong revenues have steadily increased.

Reduce money for anti-poverty programs- They were wrong. Spending increased.

Reduce Real wages- They were wrong. Real wages have increased across the board over the past 5 years at a significantly higher rate than during a similar business cycle 1990-1995.

Now, can we â??move onâ? from these tedious questions about how the â??bottom is falling outâ? of the American Economy?

Why do we need to drill in ANWAR? Because there is no slack whatsoever in the world oil supply. And based on the emergence of India and China as modern economic powers, the situation will only get tighter from here. The United States remains the only country on earth that refuses tap the huge energy reserves beneath its feet.

If we had access to ANWAR, an incident like today’s would not have nearly the impact,

Crude Oil Rises After BP Shuts Alaskan Field, Largest in U.S.

Aug. 7 (Bloomberg) — Crude oil rose after BP Plc shut Alaska’s Prudhoe Bay field, the largest in the U.S., because of corrosion in a pipeline.

An inspection completed in July found a leak in a pipeline, London-based BP said in a statement today. The shutdown will take “days” to complete, a company spokesman said. The BP- operated Prudhoe Bay field produces 400,000 barrels a day, about 8 percent of U.S. production.

So, how long have we let this ANWAR’s domestic oil reserves just sit there?

In mid-1968, a “step-out well” drilled seven miles from the discovery well, confirmed that this was a great structure, a world class oil field. A true elephant….In the tightening world oil market, Prudhoe Bay was not going to destroy any price structures, but it did have the potantial to slow the growth of American oil imports greatly and to reduce dramatically the tautness in the global oil market balance.”

This is taken from one of my favorite books, Daniel Yergin’s The Prize: The Epic Quest for Oil, Money and Power