Bush tax cuts didn’t work; time to let them expire

English: President George W. Bush talks with C...

President George W. Bush talks with Colleen Rummel during a conversation on Social Security at the James Lee Community Center, Falls Church, Va., Friday, April 29, 2005. (Photo credit: Wikipedia)

As my son put it: Happy 12-12-12!

Just nine more days until the end of the Mayan calendar and what some say will be the end of the world.

Assuming the world doesn’t end, there are only 12 more shopping days left before Christmas to fight frantic and unrelenting crowds of shoppers looking for those last-minute deals.

And a mere 19 days left before a here-to-fore inept Congress, according to economic doomsayers, allows the country to go over the so-called fiscal cliff if elected officials don’t renew the Bush tax cuts.

Not much can be done about the first two, but the third? Truth be known, Congress, despite on the recession rhetoric, probably should let the Bush tax cuts expire . In doing so, Congress also should increase the tax rate people earning $250,000 or more a year while cutting spending in a concentrated effort to reduce the out-of-control spending of the federal government.

The Trust Fund, under current law (blue) and u...

The Trust Fund, under current law (blue) and under privatization (red) as per “Model 2” considered in the 2001 commission report. (Graph from “Social Security Trust Fund” “Social Security Trust Fund” . . Retrieved 2005-12-03 . by zFacts.com) (Photo credit: Wikipedia)

When President George W. Bush initiated his tax cuts in 2001 and 2003 their was a lot of hype about supply side economics. Cutting taxes for the wealthy, Americans were told, would bring about increased economic growth and “shared” prosperity because the growth would be so strong, so significant that the tax cuts would pay for themselves and offset lost revenue as a result of tax cuts. (Hmmm, this sounds strangely familiar to the rhetoric coming out of Gov. Sam Brownback in Topeka!)

Well, guess what? According to the federal government, the Bush tax cuts were responsible for $2.6 trillion to the debt between 2001 and 2010 and the government during that time spent more than $400 billion in just servicing that debt; the cuts did not generate increased economic activity (as promised) and depleted the public treasury and tax collections dropped to their lowest share of the economy in 60 years; and between 2002 and 2007, employment increased by less than 1 percent when Bush, et al, said it would be expanding.

The ultimate result of the Bush tax cuts have been benefits to the rich, who didn’t need them and certainly didn’t use the money they saved to create more jobs or increase pay to employees. Records show that median weekly earnings fell more than 2 percent between 2001 and 2007 while people making over $3 million a year, who account for just 0.1 percent of taxpayers, got an average tax cut of $520,000, more than 450 times what the average middle-income family received.The Bush tax cuts have been an entitlement program for the already entitled and there is little evidence they, or any other tax cut benefiting the “job creators” have done anything to stimulate or increase economic growth. In fact, the Bush tax cuts can be blamed for the dim future of Social Security. Here’s why:

Impact of permanent Bush tax cut extension inc...

Impact of permanent Bush tax cut extension including estate tax (Photo credit: Wikipedia)

In preparing for the retirement of baby boomers, the government began collecting a surplus from the Social Security program beginning in 1983 while the baby-boomers were still working. That would get ready for the deficit years the system would experience after they retired. As a result, 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.

That surplus, which 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.

Not so much.

The income of the wealthy grew as they pocketed the tax cuts. But employees experienced stagnant wages and as a recession hit working class households particularly hard there was intense pressure in Congress to cut important social programs.

If people are serious about wanting to bring down this country’s insane multi-trillion dollar debt, then they need to realize that to accomplish that goal everyone is going to have to do their part. It must be a balanced approach in which everyone must sacrifice in order to secure a better economic future for our grandchildren.

No one, rich or poor, enjoy paying taxes. But revenues must be raised and spending must be cut in order to pay down the national debt, and that includes reducing, even eliminating spending on entitlements.

Ah, entitlements. Much easier said than done. Here is a list of government entitlement programs:

529 or Coverdell; Home Mortgage Interest Deduction; Hope or Lifetime Learning Tax Credit; Student Loan; Child and Dependent Care Tax Credit; Earned Income Tax Credit; Social Security–Retirement & Survivors; Pell Grants; Unemployment Insurance; Veterans Benefits; G.I. Bill; Medicare; Head Start; Social Security Disability; SSI–Supplemental Security Income; Medicaid; Welfare/Public Assistance; Government Subsidized Housing; and Food Stamps.

Imagine yourself a member of Congress. Which program do you reduce and by how much? Which program do you eliminate? How will your constituents be affected?

There are no easy answers. Everyone, the rich, the middle class, the poor, the young and the old, will need to contribute in some way to help raise revenues and decrease spending in order to reduce our national debt. A start would be by allowing the Bush tax cuts to expire.

Happy 12-12-12 indeed!

One Response

  1. Good article!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: