It’s official: The Bush tax plan loses trillions and worsens inequality

[applegrove]

It’s official: The Bush tax plan loses trillions and worsens inequality

By Jared Bernstein at the Washington Post

https://www.washingtonpost.com/posteverything/wp/2015/12/11/its-official-the-bush-tax-plan-loses-trillions-and-worsens-inequality/

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TPC estimates that the plan would lose $6.8 trillion in the first decade relative to the current tax code, and $8.6 trillion in the next decade; that’s 2.6 and 2.3 percent of expected GDP over these years. Their analysis is “static,” meaning it doesn’t build in any positive macroeconomic growth effects that some economists assume would result from lower tax rates on work, saving, and investment. However, unless those tax cuts were offset by spending cuts, many economists also assume that the higher deficits and debt they’d generate would lead to higher interest rates (as public borrowing crowded out private borrowing) and slower growth.

I’m largely unsympathetic to both of those assumptions — growth effects and interest rate effects — based on their weak empirical record. But the key point is that you can’t legitimately argue that dynamic scoring gains would offset tax cuts of this magnitude.

Could a Jeb administration plausibly cut that much spending? Not a chance. The current Congress has consistently shown that they can’t abide by the sequestration spending caps they imposed a few years ago, and for good reason; those caps are the antithesis of thoughtful budgeting. And based on demographics alone — forgetting about any new initiatives, like improving our public goods — we’re going to need more, not less, spending.

Distributionally, the TPC data show that the bulk of the tax cuts go to the wealthy: 39 percent accrue to the richest 1 percent, 10 percent to the middle fifth, and 2 percent to the bottom fifth. The figure above shows the percent change in after-tax income due to the tax plan in two time periods, compared with current law. Apparently, Bush’s plan becomes more regressive over time: its impact on after-tax income increases in the second decade for the top 1 percent (and top 0.1 percent) while remaining unchanged elsewhere.


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[First Speaker]

1. Who...?

...Bush...is that a name I'm supposed to be familiar with...?