by Karl Stark | June 07, 2011
Ten years ago today, President George W. Bush signed part one of his massive tax giveaway into law, completely squandering the massive budget surplus left behind by President Clinton. Even though the economy was about to enter a recession, President Bush decided it’d be wise to blow the country’s savings on more than $2 trillion in tax giveaways to America’s wealthiest individuals and corporations. The economic philosophy behind this action? Well, according to then Vice President Dick Cheney, “deficits don’t matter.”
Attempting to justify the tax cuts, President Bush said, “Tax relief will create new jobs, tax relief will generate new wealth, and tax relief will open new opportunities.” He should’ve added, “…for the wealthy.”
A recent study by the Economic Policy Institute shows just how lucrative the Bush tax cuts were for the wealthy, and how costly they were for the rest of us (to see how the Bush tax cuts damaged individual states, click here):
- In 2010, the top 1% of earners (i.e., tax filers making over $645,000) received 38% of the breaks in the 2001-08 tax period; 55% of the tax breaks went to the top 10% of earners (those making over $170,000).
- The top 0.1% of earners (i.e., making over $3 million) received an average tax cut of roughly $520,000, more than 450 times larger than the share received by an average middle-income family.
- The lower 60% of earners (making less than $70,000 a year) received less than 20% of the total dollar benefit.
Further, the tax cuts did nothing to improve employment. In fact, total employment increased just 0.9% annually following the enactment of the tax cuts. The economic expansion that followed the 2001 recession was the only postwar recovery in which the economy expanded without creating additional jobs. Instead, the vast majority of income gains went straight to the top 1% of earners.
Of course, many in Congress are recycling the Bush-Cheney prescription for the economy—but they’re not fooling anybody. There’s strong consensus that taxes on the wealthy need to be RAISED, not lowered. And yesterday, 108 members of Congress sent a letter to House Speaker John Boehner (R-OH) demanding that revenues should be on the table in any discussion addressing the deficit and our long-term fiscal challenges. Until this point, revenue increases have been largely absent from the deficit discussions.
In April, the U.S. House of Representatives passed a budget along party lines that cut taxes for the wealthiest individuals and corporations by an additional 10%. This was the same budget that proposed ending Medicare and Medicaid as we know them.