The White House isn’t in the best of positions right now. You know things are bad when economic growth is weak, unemployment is at its highest level in years, the trade deficit is at all-time highs, the budget deficit is at a record $455 billion — and Bush is so anxious to stop talking about his foreign policy troubles that he wants to start talking about his economic record. Poor guy.
So Bush took his show on the road this week, traveling to Pennsylvania (23 electoral votes that went to Gore in 2000) and Michigan (18 electoral votes that went to Gore in 2000). Since Bush is back to touting his economic record, such that it is, I thought I’d let you know what he was saying, and more importantly, what he wasn’t saying.
In his Michigan speech, he began by telling his audience about his 2001 tax cut. “[I]n 2001, I worked with Congress to pass tax relief. And history will show that the recession we’re in is one of the shallowest recessions our country has had.”
Bush says this a lot and frankly, I giggle every time. It makes a great bumper sticker doesn’t it? Vote for Bush, and he’ll deliver shallow recessions!
Then Bush moved on to the 2002 tax cut. He said, “Last year, when it looked like the economy was still sputtering and wasn’t strong enough, when we realized too many Americans were still struggling to find work, and too many families were having trouble meeting their monthly bills or saving for their child’s education, we acted again, and I convinced the Congress to pass the Jobs and Growth Act.”
Bush failed to mention that this didn’t work either. Since the poorly-named “Jobs and Growth Act” passed, there are fewer jobs and less growth. Despite the effort, the economy continued to sputter, too many Americans are still struggling to find work, and too many families are still having trouble meeting their monthly bills.
Which leads us to this year’s tax cut. “[T]he more money people have in their pockets, the more they will demand a good or a service,” Bush said. “And when somebody demands a good or a service, in this economy of ours, somebody will produce a good or a service. And when somebody produces that good or a service, it means somebody is more likely to find work.”
What Bush didn’t mention is that the Americans least like to spend more — the wealthy — were the ones who disproportionately benefited from his tax plan. As TomPaine.com explained, “[I]f that’s the justification for the tax cut, why not lighten the burden for (and fill the pockets of) the people who would demand goods and services, like low- and middle-income people? Why hand it to the wealthiest few, who have the goods and services they need, and will only squirrel that cash away?”
Bush wasn’t done there. “The jobs and growth plan came at the exact right time in our history,” he said. “Part of that jobs and growth plan is to increase the child credit from $600 to $1,000 per child. But I thought it was necessary to act quickly, so I asked Congress to make it retroactive to January 1st of this year, and they agreed.”
What he didn’t mention is that Republicans in Congress and the White House have manipulated the child tax credit to hide the true cost of the tax cut. Bush boasted that the credit is going from $600 to $1,000 per child. He failed to explain that under his tax plan the child credit will drop to $700 next year and fall to $500 — below the current level — by the year 2013. Bush’s cut also left out millions of low-income children all together, but more on that in minute.
Bush went on to say, “[P]art of the Jobs and Growth Act also reduced the overall tax rates people pay. It cut the individual tax rates across the board. You’re going to have more money in your pocket. That’s what we want.”
The plan may have reduced the tax rates some people pay, but not all. Somehow, Bush conveniently forgot to mention the fact that 8.1 million low-income families — who do pay income taxes — will get literally no benefit from the 2003 tax cut. Not one penny for these 8.1 million taxpayers, while millionaires and billionaires reap a windfall.
Bush did mention that nearly 12 million low-income families got left out of the expanded child tax credit. “I want to make sure the jobs and growth bill extend to all our citizens,” Bush said. “The child credit must be given to low-income Americans, as well.”
What he didn’t mention is that he’s not willing to do anything about this. House Republicans, as you may know, are resisting a Senate effort to expand the child tax credit to offer relief to families making between $10,000 and $26,000 a year. If Bush were willing to fight for these families with the same intensity as he fights for the wealthy, all he’d have to do is call Hastert and DeLay and tell them to pass the Senate bill. So far, he’s refused.
Then, of course, there’s the deficit. “Now, I know you’ve heard talk about the deficit in Washington, D.C.,” Bush said. “Yeah, we’ve got a deficit. We’ve got a deficit for a couple of reasons. The main reason is, is that when you’re in a recession, less money is coming into the Treasury. When the economy slows down, there’s less tax revenue coming into the U.S. Treasury. And we’ve been going through slow economic times.”
That’s largely true, but it hides an important point. In 2001, when Bush said we could afford a $2 trillion tax cut, the economy was already slowing down. He assured us that we could pass his gigantic tax cut and still avoid deficit spending. He was terribly mistaken.
“Another reason we’ve got a deficit, because I asked Congress to spend enough money to make sure our troops had the best equipment necessary to fight and win war,” Bush said. “Anytime this nation puts one of our youngsters into harm’s way, we’d better — and we will — make sure they get the best training, the best equipment, the best possible support.”
There’s a word to describe this, but it’s probably not appropriate for a family site like The Carpetbagger Report. War costs may be substantial, but they didn’t cause the biggest deficits in American history, Bush’s tax cuts did. According to the non-partisan Congressional Budget Office, if you take the combined costs of rebuilding after September 11, increases in homeland security expenditures, the war action in Afghanistan, the war in Iraq, and the subsequent reconstruction in Iraq, the total is still one-third the cost of Bush’s tax cuts. Everyone wants the “best possible support” for our troops, but to blame the deficit on military expenditures and not the tax cuts is absurd and dishonest.
But don’t worry, Bush knows what to do. “I’ve got a plan to cut the deficit in half over the next five years,” he said. “It starts with making sure this economy grows. First thing you want to do in trimming the deficit is to make sure you get more revenues into the Treasury.”
We’ve heard this one before. Cut taxes, the economy grows, and the tax cuts pay for themselves without increasing the deficit. Bush takes this mistaken approach one step further by starting with a huge deficit, then cutting taxes some more. He’s suggesting that the tax cuts will not only pay for themselves entirely, but also begin chipping away at the pre-existing deficit. He made the exact same argument in April.
It hasn’t improved with age — it was dishonest then and it’s dishonest now. Ironically, even the White House’s own budget projections don’t expect the tax cuts to pay for themselves through stronger growth. As the Center on Budget and Policy Priorities explained, “To the contrary, the budget projects that under the President’s policies, federal revenues will grow at a slower annual rate between 2001 and 2008 than in any comparable period over the last five decades…. In addition, the budget projects that under Bush policies, the budget will be in deficit every year for the next 50 years.”
Maybe Bush should go back to talking about foreign policy again.