The Bush Tax-Cut Failure (Bruce Bartlett)

NY Times blog ^ | 5-21-2013 | Bruce Bartlett

[Sir Napsalot]

Ten years ago this month, Congress enacted the third major tax cut of the George W. Bush administration. Its centerpiece was a huge cut in the tax rate on dividends. Historically, they had been taxed as ordinary income, but the Bush plan, enacted by a Republican Congress, cut that rate to 15 percent. The tax rate on ordinary income went as high as 35 percent.

This initiative originated with the economist R. Glenn Hubbard, who had been chairman of the Council of Economic Advisers when the proposal was sent to Congress. Mr. Hubbard was a strong believer that the double taxation of corporate profits – first at the corporate level and again when paid out as dividends – was a major economic problem.

(snip)

Finally, a January 2013 study by Danny Yagan of the University of California, Berkeley, examined the impact of the 2003 tax cut on corporate investment. He found zero change.

It is hard to find even a reputable conservative economist willing to say anything good these days about President Bush’s tax and economic policies. In 2009, the Harvard economist Dale Jorgenson said he saw no redeeming features in them.

In 2011, the economist Alan Viard of the conservative American Enterprise Institute told Bloomberg News, “The effects of the Bush tax cuts on growth were ambiguous at best.” He added, “They were not much of a poster child for pro-growth tax policy.”

Even Mr. Hubbard now seems unwilling to defend the tax cuts he shepherded into law. Earlier this year, he was asked by The New York Times what he thought about the repeal of many of the Bush-era tax cuts on Jan. 1. He said many of those tax cuts were no longer relevant to our tax and economic problems.

[Sir Napsalot]

The article specifically targeted Bush's 2003 Tax Cut on dividends. (But remember Bush's previous two tax cuts of 2001 and 2002 would already have impacted the economy, and other indicators.)

Lots of linked studies in this article to say No Change of behavior in how coporations invest, and individual "households shifted their investments from those whose return was taxed as ordinary income into dividend-paying stocks whose income was taxed less".

But Barlett said no reputable conservative economist willing to vouch for Bush tax cut nowadays, then in the next sentence used Harvard economist Dale Jorgenson (a 'global warmist' and advocates carbon tax) as his example, is kinda weak.

(Excerpt) "He (Jorgenson) was also an advocate for a carbon tax on greenhouse gas emissions as a means of reducing global warming when he testified before congress in 1997. His research has also been used to advocate for the FairTax, a tax reform proposal in the United States to replace all federal payroll and income taxes (both corporate and personal) with a national retail sales tax and monthly tax rebate to households of citizens and legal resident aliens. However, Jorgenson supports a tax plan of his own design, which he calls Efficient Taxation of Income, described in his book Investment, Vol. 3: Lifting the Burden: Tax Reform, the Cost of Capital, and U.S. Economic Growth.[1] The approach would introduce different tax rates for property-type income and earned income from work.[2]" (Wiki entry)

[FreeAtlanta]

Bush inherited a Clinton recession, and he and the tax cuts brought us out of that recession quickly. the current depression did not start until Nancy Pelosi took over congress 2 years before Bush’s term ended.

[ottbmare]

Bruce is consumed with personal (and I emphasize -personal- ) hatred for Bush and all Republicans or conservatives. You have no idea of the bitterness this former Reagan- and Bush 1 administration official feels; he’s all button-hurt because his prior sullen, depressive, hostile behavior and snobbery caused the Bush 2 people to not take him on in 2000. This colors his perceptions. It also makes him very lonely, which exacerbates his problems and perceptions. A vicious circle. Take what he writes with a handful of salt.

[cotton1706]

The economy was in great shape from 2003-2008. The recession, 9/11, then the corporate meltdowns (Enron, etc) were great blows to the economy. Then it turned around, with great help from the tax cuts (and the wars, which always help an economy). Real unemployment was at about 4.5-5%.

Then the democrats took over the congress and passed a minimum wage hike and unemployment started to rise, then the CAFE standard was raised, which increased fuel and shipping cost, and thus, price increases and inflation. And they passed some other stupid laws that they’d been dying to pass since they lost control of the House in ‘94. By early 2008, we were entering a recession again, then we had the intentional, coordinated, perfectly timed banking meltdown.

Democrats hate any tax cut and will not grant it credit for anything.

[Sir Napsalot]

Thanks, I did not know the history between Barlett and Dubya’s inner circle.

But there is enough to question on the article just from what he wrote.

[BO Stinkss]

Can't we call it the Obama tax cut now? He extended it in 2010 and then signed a law to make most of it permanent 2012. When will he own it

[driftless2]

Ottbamare is correct. Virtually every article I’ve seen written by Bartlett the last ten years has depicted Bush II as evil incarnate. Similar to Paul Craig Roberts who believes Dubya is an arch-criminal.

[Kickass Conservative]

2003 Federal Tax Revenues = $1.75 Trillion.

2007 Federal Tax Revenues = $2.5 Trillion.

There were no Bush Tax Cuts, there were Bush Tax RATE Cuts.

Economic Impact of 9/11 Terrorist Attacks were estimated to be over One Trillion Dollars. At the time it was thought that the Economy would not recover for at least ten years.

[Sir Napsalot]

Can the same groups in the article study what’s happening under Obama?

Nope? What extra money? Hmmmmmmmm......

[Sam Gamgee]

Bush cut taxes on the backs of future generations, by giving us tax cuts without corresponding spending cuts. Coolidge and Harding, who are the poster boys for tax cut recoveries, not only cut taxes, but seriously shrunk the size of government.