Never attribute to malice what can be adequately explained by stupidity.
Unknown
Julian Zelizer, "Why Bush Must Be Smiling"
No, the historian writing this Time Magazine piece isn't referring to the fact that George W. Bush's Gallup approval rating has risen to 47% (nearly his average ratings in office--49% versus his ending, 34%), above Obama's most recent ratings. One way he measures the effectiveness of a President is by the enduring nature of their policies; in Bush's case, it is the likely enduring nature of his signature tax reforms and his War on Terrorism (in particular, the consistent policies in Iraq and Afghanistan).
Zelizer summarizes the progressive case against Bush's tax policy--lowering the Clinton tax hike rates 4.6 points to a maximum of 35% was directly related to mounting deficits and rising income inequality. They see the conservative attempts to decrease high tax rates as starving the beast, i.e., progressive fiscal attempts to bridge the income inequality, out of a disingenuous concern about the deficit. If the GOP was sincere about closing the deficit, they wouldn't have cut federal revenue as a giveaway to the moneyed interests:
The cuts for the wealthy, in addition to the middle class, will continue to place a fiscal strait-jacket around government intervention, increase the size of the deficit [which will be used] to pressure the administration to make spending cuts and to characterize Obama as a big-spending liberal.It's hard to know where to start here. First, there's Hauser's Law. In essence, Hauser points out since WWII, federal revenues as a percentage of GDP has remained relatively fixed (around 19%) across range of top-level tax rates--whether the FDR rate of nearly 90% to JFK's 70% to Reagan's 28%, back up to Clinton's 39.6% to Bush's 35%. But then, you might ask, do top rates matter? In short, yes: lower taxes increase the incentive to produce--taxes are a cost, just like any other cost. Higher taxes have the opposite effect--and that's the key point the GOP is pushing.
Second, the argument is the Bush's tax cuts did not work as expected, that median income has stagnated. There are a few things to keep in mind. We shouldn't expect the same economic effects for a 4.6 point drop in a rate, as say a 20-point drop (JFK) or a 42-point drop (Reagan). Bush inherited the after-effects of a stock market bubble meltdown, an ongoing real estate bubble that was encouraged by easy money policy and the artificial demand of nontraditional high-risk home mortgage applicants, and the 9/11 and corporate scandal shocks. In addition, we have seen some structural changes as lower-value manufacturing where wages are a significant cost factor shift to countries with inexpensive low-skilled labor and more business-friendly tax and regulatory policies. These structural changes have more to do with global economic dynamics; if anything, I fault Bush and the GOP leaders for not focusing like a laser beam on cutting business top income rates and federal regulatory overhead to meet the global economic challenge. Finally, the progressives can't refute the fact that most of the Bush tax cuts went to those under the top 2% and an increasing percentage of workers pay at most their half of payroll taxes, which technically should be in a lockbox and not used for government operational funding. But even if you disagree with all that, the top 2% paid a larger percentage of federal revenue after the Bush tax cuts than before, i.e., the effect of the Bush tax cuts was significantly progressive in fact. For the Democrats' talking points to make sense, you would argue that the top 2% would have paid LESS of a share of federal income, not MORE, if the cuts were unfair to other workers.
Third, let us look at the suggestion that the GOP was attempting to starve the beast: by any objective standard, the Bush years did NOT result in the Draconian domestic program cuts but some of the largest increases in history (including education, a generation after Reagan had principled exceptions to the slippery slope of federal intervention). The Medicare drug benefit was the first major new entitlement in decades.
Fourth, let's consider whether the top tax rate is responsible for the deficit expansion. If we take into account the current estimates of $700B for 10 years and the fact that Bush's tax cuts weren't even in full effect until 2003 or so, how do we account for the fact that the federal budget nearly doubled to roughly $10T during Bush's 8 years? In other words, significantly less than 20% of the arithmetic effect of rate decreases at the top level can be linked to the increase in the debt. Even after you factor in middle class tax relief, it still doesn't exhaust the increase to the national debt. Certainly war funding at $100B a year took a chunk of federal debt, but let us remember: a budget can be balanced by raising tax revenues or cutting spending. The Democrats only want to discuss raising revenues on the backs of the economically successful--even though they could be killing the golden goose in the process. But seriously, $70B in new revenues in the context of $3T dollar spending budgets?
Even the current tax cut compromise, which gives a modest business tax break in terms of things like accelerated write-offs, didn't go far enough in terms of business growth: for example, the top tax rate is still among the highest in terms of developed nations, and businesses did not get a tax cut on their half of payroll taxes.
Too Many Ornaments on the Democratic Budget Christmas Tree: Thumbs DOWN!
Well, you have to give the Senate Democrats credit--for the budget, they are not, for once, trying to pass a 2000-page bill: this one is only 1924 pages--of which some 300 pages or so list earmarks (which, if you recall, a ban was rejected over the last several days) You have the traditional nonsense of Congressmen telling the Defense Department to get funding for certain purposes it opposes. The new $1.1T stop-gap (the current expires Saturday) does endorse the suggested federal pay freeze. (Retiring GOP senators like Voinovich and Bennett argue first of all that earmarks account for a tiny fraction of spending and simply make the appropriations tasks more transparent than under traditional processes where agency heads got the funds and politicians would pressure them behind the scenes. These arguments are disingenuous: you should simply give the agency heads less funny money in the first place.)
Political Humor
A few originals:
- Are we really surprised that Barack Obama thinks a Slurpee is a delicious drink? A Slurpee is a type of slushie, and the 2009 stimulus bill is the mother of all slush funds...
- Michelle Obama may be putting salad bars in our public school lunchrooms, but Barack Obama has put high fructose corn syrup in the tax cut compromise as in more ethanol subsidies. We need the federal budget on a low-carb diet... (Corn is a key ingredient in the generation of commercial ethanol, used as a gasoline blend. American-made ethanol costs 45 cents a gallon in tax credits to be cost-competitive with foreign-based ethanol, slapped with a 54 cents a gallon tariff.)
Bing Crosby, "Do You Hear What I Hear?"
