David Leonhardt, writing at the NY Times asks, “were the Bush tax cuts good for growth?”. Sadly, the answer is no.
Those tax cuts passed in 2001 amid big promises about what they would do for the economy. What followed? The decade with the slowest average annual growth since World War II. Amazingly, that statement is true even if you forget about the Great Recession and simply look at 2001-7…
…Every available piece of evidence seems to suggest that the Bush tax cuts did little to lift growth. I have yet to hear a good argument to the contrary, but I’d be fascinated to see another blogger or an economist take a crack at it.
Billionaires like Warren Buffett, who benefit the most, now recognize the damage done to the economy by tax cuts may dilute their holdings more than paying their fair share. Free Lunch author, David Cay Johnston, pleads with Obama to call the GOP bluff not to extend cuts to the middle class without also extending to the very rich.
Noting that most people, even billionaires, don’t want tax cuts to the richest Americans extended forcing the Republicans to vote against the middle class would ultimately provide Obama with badly needed political capital.
Republican congressional leaders have said they will let all of the Bush tax cuts expire unless the president bows to their demand that the top 3 percent of Americans be included in any tax cut extension.
Obama should call their bluff.
I don’t think the Republicans are so stupid that they would let all the Bush tax cuts expire if they cannot continue tax cuts for billionaires and the affluent on all of their income. But let’s assume that the Republican leaders on Capitol Hill are that dumb, or so beholden to the antitax billionaires funding their campaigns, that they would force universal tax increases.
More than any time in recent history, Obama force a debate on, as Johnston says, “…how best to tax ourselves in the 21st century”. This should make Tea Party libertarians and tax averse Republicans equally ecstatic.
