The nonpartisan Congressional Research Service prepared a report for Congress on the impact of the Bush Tax Cuts on the economy.
The report notes the various options of keeping some all or none of the cuts; the impact of these choices is the balance between fostering economic growth and restoring fiscal sustainability. (You can see the full CRS report here).
First, a definition: What exactly are the tax provisions of Bush Tax Cuts (EGTRRA and JGTRRA):
The Bush Tax Cuts "¢ The 10% tax rate was introduced; "¢ The 28% rate was reduced to 25% "¢ The 31% rate was reduced to 28% "¢ The 36% rate was reduced to 33% "¢ The 39.6% rate was reduced to 35% "¢ Long-term capital gains tax rate was reduced from 20% to 15%; "¢ Qualified dividends were taxed at 15% rather than as ordinary income; "¢ The “marriage penalty” was reduced by increasing the standard deduction for couples; "¢ Child tax credit, the earned income tax credit (EITC), and education incentives were expanded. "¢ Repeal of the personal exemption phaseout (PEP) and the limitation on itemized deduction (Pease) (both were gradually phased out)
I cannot quantify the last three, but the others — the tax brackets, cap gains and dividends — are easy to understand.
Here are several visual depictions of the circumstances from and impact of these taxes:
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click for ginormous charts
You should read the full CRS report, as its quite informative . . .
Hat tip Bruce Bartlett
So, I guess the subtle ‘teachable moment’ is that the Bush tax cuts have led to the deficit? Correct? Since you aren’t explicit about that I’ll just assume its your position. My reaction: Simplistic Political Bias. Very disappointing.
The important thing is to abstain from making "static" assumptions.
Assumptions regarding the behavior of people to work, save, invest, run a business, and report taxable income to the IRS.
Assumptions regarding the propensity of "the rich" to make "campaign contributions" to those politicians willing to introduce tax loopholes.
And finally, assumptions about what politicians would do if IRS revenues did actually increase.
"Static" assumptions will produce one set of conclusions; "dynamic" assumptions, quite another.
No DL, static assumptions have nothing to do with it.
It is the the historic record he is showing, not a forecast.
Facts not forecast.
Tell me Norman, how are the historic facts simplistic.
Yes, facts do happen to have a anti-Republican bias. That is why people like you keep trying to discredit them.
Comparing the deficits without comparing the spending is apples to oranges. I know revenues dropped due to the horrid economy but both administrations also went on a spending spree that sure seems way out of proportion to prior recessions.
jesus christ, where’s the spending chart?
Here’s a chart showing who, by adjusted gross income, will be the biggest sources of new tax revenue for the federal government, assuming Congress does not act to avoid the expiration of all of the tax cuts from 2003.
And since Patrick asked, here’s the relevant spending chart…..
OK, I’ll bite, why didn’t Bush and the GOP cut spending when they made these tax cuts?
Could it be because 70% of spending of Social Security, Medicare, Defense, Veteran’s Benefits, the guys who caught the parcel bombs and Interest on the National debt?
So if gov’t spending is $3T and the take is only $2T, how can anyone cut enough to afford these tax cuts?
Oh but they have a plan… to cut $100B…
http://www.cbsnews.com/stories/2010/10/28/politics/main6999250.shtml
…Sorry, that won’t put a dent in the deficit.
Oh they could do a Spending freeze…
http://articles.cnn.com/2010-01-26/politics/discretionary.spending_1_array-of-domestic-programs-discretionary-spending-federal-budget?_s=PM:POLITICS
…Sorry, Medicare and Social Security are just about to explode. That means strangling the healthcare industry and cutting individual’s Social Security drastically. not to mention defense on security and the debt payments? Can’t freeze the debt payments
Oh but Supply Side economics say tax cuts pay for themselves…
http://blogs.ft.com/martin-wolf-exchange/2010/07/25/the-political-genius-of-supply-side-economics/
…they’re 0-2 on that one: Reagan Failed. Bush Failed.
So like spencer says, the data does not favor the GOP. That’s why they don’t argue with data. They argue with rhetoric and fanciful thought experiments.
> Yes, facts do happen to have a anti-Republican bias. Oh god, how true.
Figure 5 of course assumes that spending is not cut. VennData is right that $100 billion of cuts is chickensh*t. The bloated ‘defense’ [read 'global military empire and foreign war'] budget needs to go on the chopping block too, for hundreds of billions in savings.
But that’s something which neither faction of the bipartisan War Party is willing to discuss: the stone-cold fact that America’s loss-making military empire is bankrupting it.
Let the red ‘n blue partisans keep slinging feces at each other in the toddlers’ political sandbox. Neither wing of our corrupt political duopoly has the slightest incentive to reform it.
Facts are not kind to conventional-wisdom Depublicrats, whether of the faux-liberal or faux-conservative stripe. If you can stand by silently while president George W. Obama massacres families with drones, you need a conscience transplant as well as a course in GAAP accounting.
some wanted to see spending per year (though i don’t know if it also includes Iraq or Afghanistan since a lot of the funding for those were off budget from 2002-2009)
* 2011 United States federal budget – $3.8 trillion (submitted 2010 by President Obama) * 2010 United States federal budget – $3.6 trillion (submitted 2009 by President Obama) * 2009 United States federal budget – $3.1 trillion (submitted 2008 by President Bush) * 2008 United States federal budget – $2.9 trillion (submitted 2007 by President Bush) * 2007 United States federal budget – $2.8 trillion (submitted 2006 by President Bush) * 2006 United States federal budget – $2.7 trillion (submitted 2005 by President Bush) * 2005 United States federal budget – $2.4 trillion (submitted 2004 by President Bush) * 2004 United States federal budget – $2.3 trillion (submitted 2003 by President Bush) * 2003 United States federal budget – $2.2 trillion (submitted 2002 by President Bush) * 2002 United States federal budget – $2.0 trillion (submitted 2001 by President Bush) * 2001 United States federal budget – $1.9 trillion (submitted 2000 by President Clinton) * 2000 United States federal budget – $1.8 trillion (submitted 1999 by President Clinton) * 1999 United States federal budget – $1.7 trillion (submitted 1998 by President Clinton) * 1998 United States federal budget – $1.7 trillion (submitted 1997 by President Clinton) * 1997 United States federal budget – $1.6 trillion (submitted 1996 by President Clinton) * 1996 United States federal budget – $1.6 trillion (submitted 1995 by President Clinton)
@willid3 To your point, I believe the Bush budgets didn’t include most of the war budgets – so they’d be, I’m guessing significantly increased.
It seems good that we judge the goodness of fiscal sustainability on a case by case basis, fiscal sustainability being good only if the activities sustained are good. Human beings do not desire the good of their parasites if they are aware of them as such, nor do they think of themselves and their parasites as participating together in some greater, cherished whole that ought to be sustained. Fiscal sustainability, an abstraction, seems similar to health, another abstract good that is really good only in some cases. If chiropterologists told us that vampire bats would have healthier, longer lives with improved oral hygiene, I think most of us would not, for that reason, begin brushing bats’ little teeth. To those who regard many of the activities of the “federal” government as supportive of parasitism, the prospect of those activities being fiscally sustainable must be disgusting on a grand scale.
Anyone who believes the federal budget is not “sustainable” does not understand Monetary Sovereignty
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