The Bush Tax Cuts and Supply Side Economics by Now Should Be Completely Discredited as Economic Evidence, History Show
Posted on Evans Liberal Politics, May 15, 2011, by Paul Evans: This article is dependent on John Boehner says Bush tax cuts created 8 million jobs over 10 years, PolitiFact Truth-O-Meter, May 11, 2011, The Laffer Curve in Real Life, Atlanta Journal Constitution, September 15, 2010, by Jay Bookman, and other sources, especially the Center for Economic and Policy Research.
Starting Point: FALSE: John Boehner says Bush tax cuts created 8 million jobs over 10 years
In 1980, Ronald Reagan swept into office on the corpse of Jimmy Carter's "stagflation" (economic stagnation with increased unemployment + inflation of about 17.5 percent, I remember it well). Republicans were chanting a new mantra called supply side economics, which stated, basically, cut taxes, particularly cut taxes for the rich, and this will result in economic growth. They even had so-called mathematical theory to back them up in a graphical representation known as the Laffer curve.
A cursory look at the literature on the economic successes of recent administrations shows that Boehner's claim and supply side economics in general are base lies. The only real reason for supply side economics is to raid the nation's resources to make the rich richer. The record, as documented below, shows that higher tax rates, particularly higher tax rates on the wealthy, have resulted in 1) higher GDP economic growth, 2) lower deficits and 3) a healthier economic climate with lower unemployment.
In private meetings, the wealthy chortle over their success at hoodwinking the American people into lowering taxes for the wealthy. In an article by Mark Weisbrot called Extending the Tax Cuts: The Ninety-Eight Percent Solution, published in at least 29 newspapers/websites, the snobbery and effrontery of the rich is laid bare:
George W. Bush summed it up at an $800-a-plate dinner back in 2000 with a joke: "This is an impressive crowd - the haves and the have-mores," he said. "Some people call you the elites; I call you -- my base." What made the joke really funny is that it was true.
Getting back to the PolitiFact article, John Boehner's claim about the Bush tax cuts (in other words, one of the main of examples of supply side economics in practice) and these tax cuts' economic effectiveness, PolitiFact introduces the subject as follows:
During an interview on NBC's Today show (May 10, 2011), House Speaker John Boehner, R-Ohio, offered some job-creation statistics to cast a favorable light on the tax cuts passed under President George W. Bush in 2001 and 2003.
Host Matt Lauer said to Boehner, "You talk about creating jobs. When the Bush era tax cuts were passed in 2001, unemployment in this country was 4.5 percent. Today it's at 9 percent, just down from 10 percent. So why are the Bush era tax cuts creating jobs?"
Boehner responded that the tax cuts "created about 8 million jobs over the first 10 years that they were in existence. We've lost about 5 million of those jobs during this recession."
PolitiFact's conclusion was that, essentially, Boehner's statement is FALSE. PolitiFact examines Boehner's claim about the Bush tax cuts in the time frame of 2001 to 2009, but an examination of the U.S. economy in a larger time frame is more instructive, as we shall see.
There were two Bush tax cuts, the first passed in June, 2001. PolitiFact points out that this means that Boehner's contention cannot be true, in that ten years have not passed since the tax cuts (the first package) went into effect. They note, moreover, in the first place that there is no direct evidence that it was these tax cuts which accounted for the job growth during the Bush administration at all. Any rational examination can put job growth during these years as the result of a housing bubble and stock speculative bubble, and not true economic growth with a valid basis -- this is just my opinion, although it is held by many.
Let's look at PolitiFact's numbers more closely. There are actually two measures of job growth used by economists. By the most commonly used measure, the "Current Economic Statistics" or CES figures, here is what PolitiFact found was true for the Bush years:
June 2001: 132,047,000 people employed January 2008: 137,996,000 people employed Increase during that six-and-a-half-year period: 5,949,000 people
That's roughly 6 million jobs -- significantly below the 8 million Boehner cited.