Campaign Spin VS Tax Cut Reality

A Final, Pre-Election Review of ObamaNomics (Part 2)

Congresswoman Debbie Wasserman Schultz, appearing on Fox News Sunday, responded to a question about the lack of significant job growth 20 months after the $864 billion stimulus was enacted.  Part of her answer:

We literally have now created 863,000 private sector jobs just this year alone, more jobs than the entire Bush administration created…

Ms Wasserman Schultz’s assertion was contrived to hide the truth, that 8.1 million jobs were created over a 51 month period during the Bush Administration. The chart above shows the first 20 of those successful months. Ms Wasserman Schultz continued:

…And the Republicans offer more of their failed policies of the past, take us back to the stranglehold that they had when it came to tax cutting policy, focused only on the wealthiest…

The simplistic campaign message that all Bush policies were wrong and failed is heard all across the country in the final days of the election campaign, as President Obama and the Democrats try to overcome two major negatives:

• The monster, $864 Billion “stimulus,” jammed through Congress before it was even printed, let alone read by the Senators and Representatives did not deliver the immediate job creation results that were promised.
• Congressional leaders have promised to prevent some but not all of the tax increases that are now scheduled for January 1, but they refuse to write the required legislation or hold any votes before the election.
  

Democrats hope to exploit generally negative attitudes toward President Bush to plant in the minds of voters who don’t have the time or inclination to research the facts, the false perception that tax cuts – Bush’s job creation initiative – failed where the stimulus has succeeded.

But a sincere, non-partisan effort to discover what government policies are best for job creation would start with a calm review of the Bush years:

• The dot-com bubble burst early in 2000, triggering an economic downturn.  The Nasdaq, home of most tech stocks fell 45% in ten months.  The predictable job losses began in January, 2001, the month Bush was inaugurated.
• A total of 1.8 million jobs were lost in 2001 as the recession continued and then the 9-11 terrorist attacks forced thousands of businesses to cut back or shut down completely.
• Bush responded by pressing Congress to enact the tax cuts he had promised during his campaign.  Congress finally agreed to a schedule of tiny incremental reductions in tax rates to be phased in over several years. This proved ineffective and job losses continued through 2002 and into 2003.
• In May of 2003 Bush persuaded Congress to abandon the incremental tax rate reduction schedule and enact large, comprehensive tax cuts all at once, retroactive to January, 2003.
• Job growth began in September and continued for 51 months for a total of 8.1 million new jobs.
• The mortgage crisis brought on another recession in 2008 and 4.4 million jobs were lost by January, 2009 when the Bush Administration ended.

Obviously, Bush’s final year was an economic nightmare with soaring unemployment.  But nobody can possibly make a case that the tax cuts of 2003 somehow caused the banking crisis and job losses of 2008.  Nor is there any logical argument that raising tax rates now will somehow help create jobs or prevent another financial crisis.

If Democrats’ goal had been to reverse the deteriorating employment situation as quickly as possible they would have tried to replicate the 51 successful months of the Bush Administration rather than misrepresenting the data as Ms. Wasserman Schultz did in the quote above.

The Bush tax cuts of 2003 demonstrated, for the third time, that reducing tax rates is an effective action the government can take to help the private sector generate more jobs and more prosperity.  The first time was under President Kennedy in the Sixties.   The second time was under President Reagan in the eighties.

President Obama and  the Democrats failed to learn from the lessons of history.  Instead of enacting even temporary tax relief they have consistently promised a tax increase on investors and small business job creators beginning January, 2011.  They have ramped up government borrowing, spending and debt accumulation to the highest levels in American history on the promise of immediate job creation that never materialized.