When Obama came into office, he faced the bursting of the housing bubble and a big recession. His answer was to respond with a stimulus package, mostly full of spending, but with some minor tax cuts thrown in for lip service. But his predecessor also came into office faced with a big recession and he also responded with his own stimulus package. Let’s take a look at the way both men handled the problems facing each.
As I said above, let us remember why the Bush tax cuts even took place. When Bush & Cheney took office, they faced a recession that began at the end of Clinton’s tenure in the Oval Office. The 2001 Economic Growth and Recovery Tax Act was Bush’s version of Obama’s stimulus plan. But instead of subsidizing a vast expansion of government and creating a lot of temporary government jobs, it cut tax rates increased the standard deduction for married folks, increased the child tax credit and increased contribution caps for a bunch of different savings programs.
And what did that do?
According to the National Center for Policy Analysis, the recession ended in November ’01. Of course 9/11 hit and the economy slowed way down again and it was coming back at a very anemic rate. So enter the Jobs Growth Tax Relief Reconciliation Act of 2003. It bolstered the ’01 tax cuts by focusing on dividends and capital gains.
What was the result this time?
Those “tax cuts for the rich” enabled the rich to pay MORE taxes in 2005 than they did any time in the previous two decades. You read that right, more than in the prior 20 years. In fact, the Wall Street Journal reported that those Bush tax cuts showed the richest of the rich – that famed “1%,” went from paying 25% of all income taxes in 1990 to 39% in 2005. The wealthiest 5% went from paying 44% of all income taxes in ’90, to paying a staggering 60% of them in 2005.
Isn’t the left always repeating that they wish the rich would just pay what they’re supposed to? Seems to me, they’d be a big fan of the Bush tax cuts, then. In fact, if you go back farther to 1980 and look at the numbers, with the top marginal tax rate at 70%, the wealthiest 1% paid 19% of all income taxes. Under Bush with the top marginal at 35%, they pay more than double that 19%.
The economy went from being near a standstill at 0.3% growth in 2001 to 2.5% just the next year, and by ’04 GDP was growing at its highest rate in 20 years. Correspondign to this, the unemployment fell to the lowest levels since WWII.
Did you catch that? The Bush tax cuts created the lowest unemployment levels – ever.
But you’ll never hear that in the main stream media, they’re too busy bashing Bush and covering for their ideological leader.
Speaking of President Obama, what exactly are the results of his economic approach?
Well, in November of 2011 the Congressional Budget Office downgraded its estimate of the benefits of the American Recovery and Reinvestment Act, or the ’09 stimulus spending package. The CBO says that it MIGHT have sustained 700,000 to 3.5 million jobs during it’s peak in 2010, but over the long haul, it is going to be a net drag on the economy.
Then in 2012, the CBO revised that estimate to between a paltry 200,000 and 1.2 million jobs. If we take the very optimistic number of 1.2 million jobs created by the stimulus, then each job cost the taxpayers $692,500.
Fast forward to 2014, and gues what? Looks like the CBO was correct. But what else did they say?
They said that it DID positively affect the economy in the short run, but adding all that extra debt is keeping out private investment and “will reduce output slightly in the long run…”
The Congressinal Budget Office continued to re-evaluate the stimulus every three months, so its estimates for the cost of Obama’s stimulus have varied from 787$ billion to a high of $862 billion. And the CBO has changed its model for the stimulus’ spending’s direct impact on the economy, showing that ARRA did less than first estimated.
Basically, the CBO states that for every dollar of federal spending, it “crowds out” about a third of a dollar of private spending. And this tells us what we all already knew, the best thing that government can do to put Americans back to work and get the economy pumping is to just plain get out of the way.