Bush's lies about his tax cuts & the economy.

[LaPera]

http://www.washingtonpost.com/wp-dyn/content/article/2007/01/05/AR2007010501801.html?sub=AR

PRESIDENT BUSH wrote in a Wall Street Journal op-ed Wednesday that "it is also a fact that our tax cuts have fueled robust economic growth and record revenues." The claim about fueling record revenue is flat wrong, and it is shocking that the president should persist in making such errors. After all, tax cuts are the central plank of his domestic policy. How can he fail to understand the basic facts about them?

This is not just our opinion. Harvard's N. Gregory Mankiw, an economic conservative who served as chairman of Mr. Bush's Council of Economic Advisers, has tested the hypothesis on which Mr. Bush's claim is based: He looked at the extent to which tax cuts stimulate extra growth and the extent to which that growth generates extra tax revenue that offsets the initial loss of revenue from the tax cut. Mr. Mankiw's conclusion: Even over the long term, once you've allowed all of the extra growth to feed through into extra revenue, cuts in capital taxes juice the economy enough to recoup half of the lost revenue, and cuts in income taxes deliver a boost that recoups 17 percent of the lost revenue. So a $100 billion cut in taxes on capital widens the budget deficit by $50 billion, and a $100 billion cut in income taxes widens the budget deficit by $83 billion.

If Mr. Bush does not believe Mr. Mankiw, perhaps he may believe the Congressional Budget Office. In a period when it was run by Douglas Holtz-Eakin, another economic conservative who worked in Mr. Bush's White House, the CBO estimated the extent to which a 10 percent reduction in personal taxes might pay for itself. On the most optimistic assumptions it could muster, the CBO found that tax cuts would stimulate enough economic growth to replace 22 percent of lost revenue in the first five years and 32 percent in the second five. On pessimistic assumptions, the growth effects of tax cuts did nothing to offset revenue loss.

If Mr. Bush believes neither Mr. Mankiw nor the Congressional Budget Office, he should at least respect his own Treasury. Prodded by the White House, Treasury economists have calculated how much extra growth would result from making the Bush tax cuts permanent. They have concluded that economic output would rise by about 0.5 percent in the first six years and by an additional 0.2 percent in the "long term." Since the federal government collects around 18 percent of gross domestic product in taxes, enlarging GDP by 0.7 percent would result in extra tax revenue equivalent to 0.13 percent of GDP. That would offset less than a tenth of the revenue that would be lost because of the tax cuts.

Mr. Bush's op-ed included nice statements about bipartisan cooperation. But the Democrats would be more likely to cooperate with the president if he stopped making things up.

[bluerum]

1. Please. The hallmark of this administrations policy is deceit and deception.

To believe anything, anything at all that these lying pigs have to say is,,, well,,, I think Mr.Mousbender in the Monty Python Cheese Shop bit expressed the sentiment well.

Predictable really, I suppose. It was an act of purest optimism to have posed the question in the first place. Tell me:

have these people EVER told the truth?

[malaise]

2. Everytime Bush speaks

he lies. Get over it. Impeach.

[leftchick]

3. it was a fucking"error"

It was a bald faced lie. This whole article is premaced upon the fact that bush doesn't understand what he has done. Give me a fucking break.

:banghead:

[hfojvt]

4. I scooped the WaPo. I scooped the WaPo

http://journals.democraticunderground.com/hfojvt

Then again, it is a seven year old story. :blush:

[mrcheerful]

5. But information only works on those who don't hold on to a belief system

that all of america's problems are because of the welfare system. My mil insists that all people have to do is go out and get a job. She insists that a homeless person can find work without an address, car or phone. She seen how businesses are closing and all the rest of the things going on, yet still insists that theres plenty of work for all. When facts are put out to her, she falls back on the good old stand by "not my problem". Yet its everyones problem when she can't get food stamps, she made a small investment a few years back and it stops her from being eligible for assitence. She'd have to cash out of her investment, take a big loss because of taxes and then have to show where the left over investment money went. But she says thats not fair because she knows drunks get food stamps. I end up with head aches trying to explain the system to her, but then she hasn't a problem that the rich get tax cuts and she has to pay for their tax cuts.

[whistle]

6. I think another way to look at this using the same numbers for illustration

...would be as follows:

$100 billion cut in taxes on capital requires the federal government to spend $150 billion which pumps $250 billion into the economy but still draws in just $200 billion back in taxes thus causing a net deficit of $50 billion.

$100 billion cut in taxes on income requires the federal government to spend $183 billion which pumps $283 billion into the economy but still only draws in just $200 billion back in taxes thus causing a net deficit of $83 billion.

Thus, the combined effect of $200 billion cuts on capital and income requires the government to pump back $533 billion realizing only $400 billion back in taxes, thus creating a net deficit of $133 billion. Without the additional federal spending the economy would stall then fall into a free-fall depression. It is voodoo economics, at least the way the republicans have done it.

The real trick is to make the federal spending projects work for long term infrastructure projects which return new revenues ongoing jobs and more capital expenditures over several generations and create real wealth in the economy. High speed rail, 4th generation safe nuclear power plants, machine tool modernization, intercontinental magnetic levitation trains, water reclamation projects, etc. Bush and the republicans have squandered trillions on war and unnecessary military spending, none of which adds anything to productivity. It is time to stop the insanity and impeach Bush/Cheney.