Tuesday, September 01, 2009

Diane Lim Rogers is very smart

Around three weeks ago, she expressed well a point that I have not expressed so well:

That’s why the two concerns Bruce has about the Bush tax cuts–(1) that they were and are unaffordable; and (2) that they did not permanently reduce marginal tax rates and hence weren’t true “supply side” tax cuts–lead to only one conclusion, and that’s that we need to be thinking more seriously about fundamental (truly base-broadening, keep-rates-low) tax reform.

But of course, now it’s the Obama Administration who’s in charge, and they’ve decided to include $2 trillion worth of deficit-financed Bush tax cuts in their own 10-year budget–that’s $2 trillion of the possible $2.6 trillion of the entirety of the Bush tax cuts.

So left-leaning commentators are reiterating their disdain towards the Bush tax cuts:

[by Robert Creamer on Huffington Post:] [L]et’s be clear, the Bush tax cuts didn’t just produce fewer jobs than advertised. They didn’t produce any private sector jobs at all. The whole experiment in handing over money to the wealthiest people in America so they could use it to benefit the rest of us was a colossal - empirically verifiable - failure.

Turns out that when given the chance to use all of those tax cuts, the top two percent of the population used them to speculate in exotic derivatives, to drive up the prices of high end real estate, pay exorbitant prices to the designers of $4,000 blouses and $2,000 shoes. There is absolutely no evidence that they made any more investments in new manufacturing plants, or started up any more businesses than they would have had they paid the same tax rates that they did when Ronald Reagan took office and private sector job growth was 3% per year.

No, instead the rich used the Bush Tax Cuts to create the gigantic economic “bubble” that ultimately burst and caused immeasurable hardship and suffering to millions of average Americans and everyday people across the globe.

Bottom line is that the rich sold America a bill of goods. Give us big tax cuts and we’ll give you jobs growth, they told us. America kept its end of the bargain, and the rich reneged entirely on theirs.

In a word, the economic theories of the Republicans and the Right were simply wrong. In fact, they were elaborate intellectual justifications for the richest among us to enrich themselves even more…

…but are failing to recognize that almost all of the tax cuts that President Obama has proposed–and in fact all of the deficit-financed tax cuts President Obama has proposed–are in fact the old “Bush tax cuts,” which will now become the “Obama tax cuts” as soon as President Obama signs the extension into law before the end of next year. And while those who have hated the Bush tax cuts but love President Obama would like to believe that President Obama is letting the worst part of the Bush tax cuts (those “for the rich”) expire, the truth is that the “Obama tax cuts” will still go disproportionately to “the rich,” even with the upper tax brackets expiring.

Yep. The Bush/Obama tax cuts are a sad truth that all of us (Reagan supply-siders, Clinton fiscal conservatives, and even the most liberal of Obama supporters) don’t want to believe our new President who stood for “change” could let happen.

1 comment:

David Barker said...

I am a real estate investor, and I calculate that the Bush tax cuts have saved me close to $200,000. What did I do with the money?

1. Debt reduction. I paid off a little more debt than I otherwise would have, leaving me in better shape to handle the recession.

2. Property improvement. I have speeded up some capital improvements, both because of bonus depreciation and cash I had available from rate reductions.

3. Modest increase in consumption.

My spending has not "caused immeasurable hardship and suffering;" I think it has had a small positive effect on the economy - less leverage, more spending.

How am I reacting to the upcoming Obama tax increases? I am spending more on lawyers and accountants to find unproductive ways to avoid them.

Taxes are far more destructive than most academics want to believe.