According to Bush Economists: His Tax Cuts Don’t Really Improve the Economy

Another thing to remember, as you’re watching the Fiscal Cliff negotiations:

Back in 2006, President George Bush asked the US Treasury Department to analyze what would happen to the economy if his tax cuts were made permanent.  Treasury economists conducted a “dynamic analysis” of the tax cuts, which was clearly intended to provide a political justification for making the tax cuts permanent.

best case scenario for economic impacts of Bush Tax Cuts

This is the Treasury’s “best case” scenario, which
is based on extremely optimistic assumptions.
Source of chart: Center on Budget and Policy Priorities.

But here’s what they found, instead:

even under favorable assumptions, making the tax cuts permanent would have a barely perceptible impact on the economy.  Under more realistic assumptions, the Treasury study finds that the tax cuts could even hurt the economy. In addition, the study casts doubt on claims that the tax cuts are responsible for much of the recent growth in investment and jobs.  It finds that making the tax cuts permanent would lead initially to lower levels of investment, and would result over the longer term in lower levels of employment (i.e., in fewer jobs).

What ?!?

The Treasury study finds that making the tax cuts permanent would reduce long-run labor supply (i.e., the number of people working and the number of hours they work) by 0.3 percent.

Three-tenths of one percent in today’s labor market translates into about 468,000 jobs.

If we end the Bush tax cuts, will those jobs come back?

Former VA. Congressman Tom Perriello talks about “austerity minefield”

Perriello was  joined by the New Hampshire Fiscal Policy Institute’s Jeff McLynch to discuss New Hampshire impacts 

Concord – Center for American Progress Action president Rep. Tom Perriello, a former member of both the Veterans’ Affairs and Transportation and Infrastructure committees, briefed reporters Thursday on the current state of the fiscal cliff discussions and the consequences for us if we fail to pass tax cuts for 98% of Americans and 97% of businesses and continue investments in infrastructure.

Speaking to reporters from his D.C.-area office, Perriello pointed out that what we currently face is less a fiscal cliff than an “austerity minefield” made up of “landmines” including the expiration of the Bush-era tax cuts, the end of unemployment benefits for many Americans, the payroll tax holiday, the so-called Medicare “doc fix” adjusting doctors Medicare reimbursements, the defense sequester, and the alternative minimum tax.

“These are only really together by happenstance. Some could be fixed by Congress individually either now or retroactively,” Perriello said. “Doing nothing means a return to the Clinton tax code as opposed to the current Bush code, which were not great for growth,” Perriello said.

McLynch, executive director of the New Hampshire Fiscal Policy Institute echoed Perriello’s remarks.

“New Hampshire is in better shape than much of the country, but our growth is still slow,” McLynch said. “The number of defense-related jobs that New Hampshire has also makes us vulnerable to the sequester in a way that other states might not.”

While Rep. Perriello remains optimistic about the chance for a solution, many in Washington view the refusal of Republican lawmakers to consider rate increases on the most affluent of taxpayers an obstacle. In New Hampshire, while Sen. Kelly Ayotte voted for a bill that would keep in place tax rates for middle-income families without protecting wealthier Americans, neither Congressmen Charlie Bass or Frank Guinta have been willing to sign on to the measure.

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ABOUT THE ACTION: The Action is a grassroots movement that demands Congress end the Bush-era tax cuts for the richest 2%—those making more than $250,000 per year. The Action is for critical investments that create and sustain jobs.  New Hampshire Citizens Alliance for Action is leading the charge in New Hampshire.

NH Citizens Alliance For Action, Protests In Front Of Ayotte’s Office

Over twenty activists stood in unity outside Senator Ayotte’s office on Main Street in Nashua on Saturday afternoon. Their message was clear: if cuts need to be made in a deal to avoid an austerity crisis, Sen. Ayotte should consider trimming Pentagon waste, not slashing funds for programs that matter most to the middle class, children, and the elderly, like Social Security and Medicare.

Senator Ayotte has been touring the country, meeting with millionaire Pentagon contractor executives, and emphasizing her belief that the indutry should be exempt from the budget downsizing that would face nearly all federal departments if automatic cuts take place next year.

Senator Ayotte has said her concern over cuts to Pentagon spending are about jobs. However, as activist Mark Provost of Manchester pointed out, dollar-for-dollar, the federal government creates more jobs when they fund education, health care, and clean energy.

The rally was organized by the group New Hampshire Citizens Alliance for Action, a non-profit based in Concord that works for social, economic, and political justice. You can find their Facebook page at www.facebook.com/NHCitizensAllianceforAction.

Staff member Jillian Andrews Dubois of Hudson emphasized that the Pentagon has waste that can be cut without harming miltary members and their families. “We Americans are responsible for 41% of the world’s defense spending, despite being less than 5% of the world’s population,” she stated. “The Pentagon even ended fiscal year 2012 with $105 billion dollars just sitting in a bank account.”

Fiscal Cliff: Who is “entitled” to what?

Something else to remember, as you’re watching news coverage of the Fiscal Cliff negotiations:

The tax rates that GOP Congressional leaders are trying so hard to defend are relatively recent – and the public has never supported them.

Washington Post Poll September 11 2001Just months after the first round of tax cuts was passed, in 2001, a Washington Post poll found that 57% of Americans wanted to roll back the tax cuts in order to preserve the federal budget surplus. (Yes, we had a surplus, back then.)

There’s more:

President Bush’s budget director had just warned congressional Republicans that “it was likely the government would tap the Social Security surplus this year, contradicting what he had been saying only a few weeks earlier.”

That same Washington Post poll found that “an overwhelming 92 percent of those surveyed said they opposed using Social Security funds” for things other than retirement benefits.

That was in 2001. Two years later, it was clear that the first round of Bush tax cuts hadn’t “jump-started” the economy – so the White House pushed through another round. This time, the bill had so little support it almost didn’t pass the Senate. GOP stalwarts John McCain, Lincoln Chafee and Olympia Snowe all voted against it. The Senate split 50-50 – and Vice President Dick Cheney cast the deciding vote.

That’s right… Dick Cheney was responsible for passing the tax cuts that House Speaker John Boehner is now trying so hard to defend.

“Entitlements”?

In recent weeks, Speaker Boehner has been talking about tax cuts for the wealthy as if they’re somehow sacred. He doesn’t seem to care what he has to sacrifice, to protect those high-income taxpayers.

Speaker Boehner is insisting on cuts to “entitlement programs” such as Social Security, Medicare and Medicaid – before he will agree to any fiscal cliff “compromise”.

And if taxes are going to be raised – well, guess who Speaker Boehner expects to pay the price? Here’s Senate President Harry Reid’s analysis of Speaker Boehner’s latest proposal, earlier today:

“Their proposal would raise taxes on millions of middle-class families,” Reid said on the Senate floor. “Their plan to raise $800 billion in revenue by eliminating popular tax deductions and credits would reach deep into pockets of middle-class families.”

Speaker Boehner wants to cut “entitlements”?!

The working families of America have paid into the Social Security system for decades, expecting to get benefits back when we retire.

High-income taxpayers owe their low tax rates to former Vice President Dick Cheney.

Who, exactly, should be entitled to what?

Read more about the fiscal cliff here.

Sheldon Adelson: One Man’s Influence Over America’s Politics

Remember Sheldon Adelson, our poster child for dividend tax reform?

“As CEOs receive more of their compensation in stock, they have a bigger personal stake in decisions about what to do with corporate profits.  Should the company reinvest profits by expanding operations and hiring new employees? Or pay profits out to shareholders as dividends?   Implement a long-term growth strategy?  Or loot the company for as much immediate payout as possible?  When top executives own millions of shares, they have a huge personal stake in that decision.”

“Remember how casino mogul Sheldon Adelson pledged to spend $100 million on Mitt Romney’s campaign?  Wonder how he could afford it?  It was only a fraction of the amount Adelson received this year in stock dividends from his company – even though ‘Dividend payments to shareholders are not standard in the casino industry…’ “

Read the full story here.

Turns out, Adelson spent more than he pledged.  According to yesterday’s Huffington Post, Adelson spent about $150 million trying to get Mitt Romney elected.

As [President Obama’s] second term begins, Adelson’s international casino empire faces a rough road, with two federal criminal investigations into his business.

This coming week, Adelson plans to visit Washington, according to three separate GOP sources familiar with his travel schedule. While here, he’s arranged Hill meetings with at least one House GOP leader in which he is expected to discuss key issues, including possible changes to the Foreign Corrupt Practices Act, the anti-bribery law that undergirds one federal probe into his casino network, according to a Republican attorney with knowledge of his plans.

Read more here.

Also yesterday, Politico reported

A week after Election Day, three Republican governors mentioned as 2016 presidential candidates — Bobby Jindal, John Kasich and Bob McDonnell — each stopped by the Venetian Resort Hotel Casino to meet privately with its owner Sheldon Adelson, a man who could single-handedly underwrite their White House ambitions.

Planning a presidential campaign used to mean having coffee with county party chairs in their Iowa or New Hampshire living rooms. The courting of Adelson, a full four years out from 2016, demonstrates how super PAC sugar daddies have become the new must-have feature for White House wannabes.

Read the Politico report here.

Is this what American democracy is coming to?  The personal preference of one very rich man is more important than the New Hampshire primary?

Remember, this is the same man who had tax breaks worth $2.3 billion riding on the outcome of the 2012 elections.

And whatever tax reforms Congress makes – or doesn’t make – as it resolves the fiscal cliff

…well, all those reforms could be changed again, by a new Congress and a new President, depending on the outcome of the 2014 and 2016 elections.

This is a long-term game, folks.

Please learn about and support the Saving American Democracy Amendment to the US Constitution.

 

Looking Over the Fiscal Cliff

Congress returns to Washington DC today – but “fiscal cliff” negotiations aren’t expected to resume until next week.

The delay may allow Congressional GOP leaders to bring a different position to the bargaining table.

Immediately following Election Day, GOP leadership seemed stuck in their “no new taxes” campaign rhetoric.

Since then, several prominent Republicans have questioned the wisdom of sticking with Grover Norquist’s infamous “pledge”.

Over the decades, Norquist’s “pledge” has not been a fiscally-conservative position.  It works like a ratchet wrench: things can only go in one direction; taxes can only go down.  And taxes have gone down – considerably – since Norquist started agitating.

Right now, the federal tax burden – tax revenues as a percentage of the economy – is at one of the lowest points in modern history.

Much of the decline was caused by cuts to corporate taxes.

Next week’s “fiscal cliff” negotiations need to be framed by this reality.  Particularly in a down economy, Congress can’t just cut its way to a balanced federal budget.  (They have tried that in Europe; it’s not solving anything.)

America’s working families know that you can’t balance the budget if revenues keep declining.  We’ve tried to keep our own books balanced despite declining wages.  Too many families have ended up doing just what the federal government has done: borrow money to make ends meet.  And that doesn’t work out very well, over the long term.

As the “fiscal cliff” negotiations continue, keep an eye on your Social Security and Medicare benefits.  It’s just like what happened with the NH Retirement System: the politicians want to cut our benefits, after we spent decades paying into the system.

Right now, even the politicians who are forswearing Norquist’s “pledge” are insisting on “entitlement reforms” in exchange for “new revenue”.  But that’s a false choice.  They are simply trading one way of ratcheting-down taxes for another.

Returning tax revenues to their previous (pre-Norquist) levels would go a long, long way toward solving our country’s debt crisis.

 

[Tax revenues shown above do not include Social Security, Medicare or other retirement program revenues.  Data is from Table 2.3 of http://www.whitehouse.gov/sites/default/files/omb/budget/fy2013/assets/hist.pdf.]