Debunking Bush's Economic Success

Last week Bush ran around touting how great the economy is under his administration; this week Robert Freeman sets the record straight about the veracity of Bush's statements. This is rather lengthy, but I'm posting most of it intact since I feel his remarks are that important.

Is the economy, in fact, so sound? And were Bush's tax cuts really that successful? Let's look at the facts.

In fact, the Bush recovery has been one of the weakest ever recorded. "By virtually every measure, the economy has performed worse in this business cycle than was typical of past ones," reported the Economic Policy Institute.

For example, GDP growth since the bottom of the 2001 recession has averaged 2.8%. But it grew at an average rate of 3.5% over the prior six recoveries. Or consider jobs: 1.3% more jobs under Bush versus 8.8% more during earlier upswings.

Private sector jobs, a metric one would assume to be close to a Republican's heart, fared even worse: up only .8% since 2001 versus an average of 8.6% for past recoveries. Investment? Up 3.6% as a result of Bush's policies compared to the 8.2% average for the six earlier rebounds.

Pick your measure - growth, jobs, income, investment, spending - the recovery based on the Bush tax cuts is one of the weakest ever recorded. And the reason is obvious. Bush's tax cuts have gone overwhelmingly to the very richest of Americans. Of $1.7 trillion in total cuts, $578 billion or 33% went to the top 1% of income earners according to Citizens for Tax Justice. The top 20% of income earners received 71% of all tax cuts.

If you use the tax code to shift money to millionaires, they only spend a small portion of it. The rest sits in the bank, buys a trip to Tahiti, or chases new investments in Hong Kong or Singapore. Little of it is spent. This is not class warfare as Bush likes to claim. It is an empirical statement. How many Mercedes' can you drive at one time, anyway?

On the other hand, if you give tax relief to the poor and middle class it goes right back into circulation. And fast. School clothes for the kids, a new transmission for the car, fix the roof, groceries, health care, higher gas bills-you name it, the money gets spent. This, too, is an empirical statement...

Trade deficits approaching three quarters of a trillion dollars a year? Cut taxes on the rich. They need more money. GM and Ford closing 19 factories? Cut taxes on the rich. They need more money. Intel, Cisco, Hewlett-Packard, and IBM all building multi-billion-dollar plants in China? Cut taxes on the rich. They need more money.

Five airlines and the country's largest auto parts maker in bankruptcy? Cut taxes on the rich. They need more money. Three million high-wage manufacturing jobs lost in four years? 44 million Americans without health insurance? Crude oil at triple the price of only four years ago? One out of six American children raised in poverty?...

Meanwhile, the household income of average Americans has fallen five years in a row - the first time that has ever happened. At the end of 2004, it was still 3.6% below where it was when Bush took office. In wealth terms the situation is even worse. The bottom 40% of families have been wiped out. They collectively own less than 1% of the nation's wealth. Bush's solution? Cut taxes on the rich. They need more money.

The most vulnerable, the bottom 20% of Americans, have been especially hard hit. Their incomes are 8.7% below 2000 levels. 5.4 million more people are in poverty since Bush took office. Hunger has risen 43% since 1999, reports the USDA. Bush's answer? That's right. Cut taxes on the rich. They need more money.

Read the rest of it for yourself. Freeman writes much more, but the most important point he makes is this: "Those debts will have to repaid by our children. The costs of repaying them will mean their standards of living will fall, perhaps precipitously. For paying back Bush's debts will mean they cannot, at the same time, make the investments in infrastructure, education, and research and development that created past prosperity."