The Bush Tax Cuts Will Hurt The Economy
CBO Director Doug Elmendorf testified before the Senate Budget Committee today and dropped something of a bombshell. Extending the Bush tax cuts, he said, will “probably reduce income relative to what would otherwise occur in 2020.” The reason is simple: Debt.
Elmendorf doesn’t deny that tax cuts stimulate the economy. But they don’t stimulate it that much, he says, and over the long run, the net economic growth from the tax cuts will be quite small. The net deficit impact won’t be. “Lower tax revenues increase budget deficits and thereby government borrowing,” Elmendorf said, “which crowds out investment, while lower tax rates increase people’s saving and work effort; the net effect on economic activity depends on the balance of those forces.”
If we want stimulus there’s better ways to do it. But like I said yesterday, why are we talking about the Bush tax cuts as a great economic policy? We are under the Bush tax rates right now and the economy sucks. Bush’s job creation record is the worst since Hoover.
Tags: Tax Cuts, The Economy
“Will” hurt the economy? They already did.
Agreed. Let’s not accept the Republican frame of talking about the tax cuts as if we didn’t already have a decade of data on the results.
It is the spending stupid. that is what is hurting the economy.
Encouraging rich people to hoard money, for some reason, hasn’t created the jobs Bush expected.
It is the spending stupid. that is what is hurting the economy.
You do realize, don’t you, that government spending is part of GDP?
If Obama cut spending 5% you would blame him for the resulting instant recession and unemployment.
Nobody could have tried harder to cut spending than Reagan. They emptied the mental hospitals, and tried to make ketchup a vegetable for schoolkids. And Reagan was only able to cut discretionary non-military spending 11%, and still spending went up. So what exactly do you want to cut again?
Please. They don’t care about spending. That is just cover for the racism.
“Nobody could have tried harder to cut spending than Reagan.” Well… except for the defense spending. He could have tried harder there.
Please. They don’t care about spending. That is just cover for the racism.
I don’t think they care if the people getting the money are black or white, as long as they are rich.
But yes, racism is one of the hooks the rich use to get the rednecks to carry their water for them.
Please, be specific in what you are advocating here. President Obama ran on extending the 2001 and 2003 tax cuts for everyone except the top 2% of producers, while the Republicans would like to extend them for everyone. But the article you linked pretty much advocates letting all of the tax cuts expire.
Speaker Pelosi had said that the House of Representatives would vote on extending the tax cuts before adjournment, but that didn’t happen: the Democrats didn’t want to face a vote on extending them all, and there were enough Democrats who favored 100% extension that such probably would have passed the House. Instead, nothing.
I have a bet with Perry, made here and accepted here: Perry said that “Obama would be breaking his pledge were he to let the Bush tax cuts expire on the <250K citizens; he won’t do that!” I bet that they would expire, with an end date for the bet of 31 December 2010; right now, I’m still on track to win! 🙂
So, what is it that y’all advocate: what President Obama proposed, or letting all of the tax cuts expire?