There's no such thing as a free lunch, and there's no such thing as an honest case for extending the Bush tax cuts. Ten years of hard data prove they were a complete failure. They did not work while Bush was in office and they did not work during the first two years of the Obama Administration. No wonder the Congressional Budget Office says that the GOP's proposed extension of tax cuts to the rich will reduce future economic growth.
In terms of promoting economic growth, the Bush tax cuts were a complete failure.
Under George W. Bush, U.S. GDP growth averaged about 2.1% a year. Since the end of World War II, the country has never experienced such low economic growth during an 8-year period. And if you exclude the war demobilization of 1946, when U.S. government spending fell by two-thirds and the GDP fell by 10.9%, Bush had the worst economic record since Herbert Hoover. During FDR's first two terms, when the country remained mired in a Depression, GDP growth averaged about 6.3% a year.
There is no way to make Bush's performance look good. Even if you cherry-pick the data, by excluding fiscal year 2008, when GDP growth was zero, economic expansion was anemic. During Bush's first seven years, it averaged about 2.4%, the worst rate in half a century. And what was the source of most of that economic growth? Homeowner equity extraction. Bush could point to one sector where growth outpaced that of all prior administrations: Residential mortgage debt. It almost doubled, from $5.1 trillion to $9.8 trillion, between 2001 and 2006.
Average Annual GDP Growth
Bush 2001-2008: 2.1%
Clinton 1993-2000: 3.9%
Reagan/Bush I 1981 - 1992: 3.0%
Carter 1977 - 1980: 3.2%
Nixon/Ford 1969 - 1976: 2.8%
Kennedy/Johnson 1961 - 1968: 4.8%
Source: Bureau of Economic Analysis
Of course, these numbers understate the magnitude of Bush's failure, since the full effects of the 2008 financial meltdown were not felt until 2009 and later. Though Bush has left the White House, his tax cuts have remained in place. What's completely missing is any evidence that his tax cuts did anything to boost the economy.
After Clinton raised taxes on the rich, GDP growth spiked. His 8-year average was about 3.9%, close to twice what it was under Bush.