Whenever in the past this blog did a post talking about how lower taxes spurred economic growth and raised government revenue during the Reagan and Bush administrations, liberal trolls would always add comments claiming that the economic recovery during the Reagan administration was caused by Reagan raising (and not lowering) taxes, and that all of America’s current financial woes are the result of Bush’s two “unfunded” wars and his tax cut.
Both of these assertions have their origin in talking points provided by the Obama administration, dutifully parroted by naive youngsters who know nothing else, and mendacious oldsters who certainly know better.
The first assertion is self-evidently untrue to anyone who lived during the Reagan administration and was evenly remotely paying attention to the news. And anyone who says otherwise is simply lying, and knows it.
The second assertion is also untrue. How do we know this? Because Obama’s own figures show that it is a lie. As reported by IBD,
Obama argued voters made it clear in the election that they don’t want to go back to Republican policies that “cost” the Treasury revenues and “blew up the deficit,” as he told them repeatedly during the campaign …
But the assumptions are faulty, based largely on political demagoguery rather than hard numbers — including ones certified by Obama’s own fiscal policy advisers and bean counters in the White House.
Turn to Pages 411-413 of his 2012 Economic Report of the President, published by the Council of Economic Advisers. They show that “the math,” as Obama is wont to say, in fact does add up for tax cuts.
After President Bush in late May 2003 signed the largest tax cut since President Reagan — including dropping the top marginal rate to 35% from 39.6% — government receipts from individual income taxes rose from $793.7 billion to a peak of $1.16 trillion in 2007, when the mortgage crisis began, a 47% jump.
Stronger economic growth expanded the tax base and brought in so much revenue that Bush more than halved the deficit over that period. The budget gap plunged to $160.7 billion from $377.6 billion, according to the president’s report.
Perhaps the most impressive statistic appears on Page 412, one that undercuts Obama’s core argument against continuing the Bush tax cuts.
The post-tax-cut surge in economic growth and tax revenues helped drive down the deficit from 3.5% of gross domestic product in 2004 to 2.6% in 2005, to 1.9% in 2006 and to a manageable 1.2% in 2007.
Based on Bush fiscal policies, the nonpartisan Congressional Budget Office projected budget deficits of 0.7% to 1.5% of GDP for the years 2008 through 2011. The CBO even predicted surpluses for the subsequent years through 2018.
What derailed the forecast was the subprime mortgage crisis of 2008.
This financial anomaly threw the economy into a deep recession, beginning in December 2007, and forced a collapse in federal tax revenues.
As a result, the deficit-to-GDP ratio shot up to 10% in 2009 and has remained around that level, thanks to record Obama spending …
The Bush tax cuts did not “cost” the Treasury revenues. Nor did they increase income inequality.
When fully implemented, they increased the portion of the income tax burden that fell on the wealthiest Americans.
The top 1% of taxpayers went from paying 38.4% of overall taxes to 39.1%, while the bottom 50% saw their share drop from 3.4% to 3.1%.
And as a percentage of the economy, deficits shrank to historically low levels.
Record red ink flowed much later as the housing market toppled and government spending shot up.
In short, Obama has himself and his own party to blame for this crisis. He was in support of offering subprime mortgages and this was a policy the Democrats pushed through, and he was the one who blew a hole in the federal budget in 2009, after Bush left office.
Essentially, the Obama administration is lying to people, and knows it. Obama’s goal is not to cure the deficit or to help the economy. Rather, Obama is set on reshaping American society according to his liberal agenda. He cares about nothing else, and any assertions to the contrary are bat guano.