During the debt ceiling debate they were called terrorists, suicide bombers, extortionists and hostage takers.  A Google search found dozens of July articles titled “The Teaparty’s War on America.”  Here’s a quote from the one in the New York Times:

These last few months, much of the country has watched in horror as the Tea Party Republicans have waged Jihad on the American people…But they didn’t care. Their goal, they believed, was worth blowing up the country for…

President Obama eschewed the T word and the J word but he has begun a campaign to position the tea party to take the blame for what will likely be many more months of high unemployment and economic misery.  He says they have “hurt the economy” by demanding spending cuts and debating the debt ceiling increase.

Obama’s claim begs the question, what happened to the economy after the last debt ceiling increase?  That was in February, 2009 when Democrats still had commanding majorities in both the House and Senate.  The  Republicans were too small a minority to offer any resistance so the debt ceiling increase sailed through with little discussion, little media coverage and no spending cuts.

But we heard silence from the media and the politicians last week after the Treasury Department released its report of revenue and spending for the first seven months of fiscal 2011.  Income tax revenue was up 26%, or $131 billion over 2010 even though those hated “Bush tax cuts” are still in effect. If the trend continues through the remainder of the fiscal year income tax payers will send $233 billion more to the IRS in 2011 than in 2010 without any increase in tax rates.

Tax revenue projections from Washington are usually designed to give you the impression that there will be no increase in revenue without a hike in tax rates.  Thus not raising tax rates will “cost” revenue.

In a report last fall the Congressional Research Service (CRS) asserted that the “cost” of extending the current tax rates for the “the rich” would be $252 billion over five years, or about $50.4 billion per year.  CRS did not explain how it arrived at this projection.

In December the Congressional Budget Office put the “cost” at $675 billion over ten years, or an average of $67.5 billion per year.  CBO didn’t explain its process either.

Do these projections mean revenue can’t go up unless tax rates go up?  CBO and CRS didn’t say.  But that’s what Obama wants you to believe.  But revenue has gone up without  a rate increase and has already blown past CBO and CRS projections with a rate increase.

In reality the strength of the economy is a much more significant driver of tax revenue than tax rates.  This chart tracks three decades of tax rate increases and decreases.

As the chart shows, income tax revenue was falling before, and then increased after the Reagan tax rate cuts of the 1980s.   Revenue was virtually unchanged after the first of two tax rate increases in the 90s.  After the second increase revenue went up for several years then declined three years in a row.  After the Bush tax cuts lowered the rates revenue went up dramatically, reaching an all time record high in 2008.  Revenue was down in 2009 and 2010 because of the deep recession.

The Bottom Line

Higher tax rates are not a guarantee of more tax revenue.  But higher tax rates do diminish economic growth.  The economy will improve more rapidly, and business can create more jobs, with lower tax rates than higher tax rates.  Tax revenue has already increased even in an anemic economic recovery.   Congress  should not subject us to the economic risk of a tax rate increase that might further weaken an already weak recovery, in the hope of a revenue increase that might not materialize.

The real cause of catastrophic deficits is relentless spending increases, not a lack of tax revenue.

We can’t afford another so-called economic “expansion” like the one from the last decade –- what some call the “lost decade” -– where jobs grew more slowly than during any prior expansion…

The chart compares the effect on employment of two, fundamentally opposite, government strategies, the Obama stimulus of 2009, and the Bush tax cuts of 2003.   Both were enacted after an extended period of job losses.

The last economic downturn, initially caused by the bursting dot-com bubble began in late 2000, with job losses starting in January, 2001 and accelerating after the terrorist attacks of 9-11-01 deepened the recession.  Congress enacted a “stimulus” in the form of small tax rebates and a five-year schedule of tiny, incremental tax rate reductions that began in 2002. These measures proved ineffective and job losses continued.

A Stimulus Based on Liberty: In 2003 President Bush persuaded Congress to abandon the five-year, incremental schedule, and enact large, sweeping tax rate cuts for individuals and small business.  Rates were reduced across the board for all income brackets and for capital gains and stock dividends.  This was the “stimulus” of 2003, a stimulus based on greater liberty.  Tax rate reduction, was a strategy that had proved successful when implemented by Presidents Kennedy and Reagan.

Over the next 52 months of continuous growth private sector employers added 7.3 million jobs.

Throughout those four plus years then Senator Obama, the Democrats and the establishment media continuously claimed that President Bush’s tax cuts had created a “jobless recovery.”

A Stimulus Based on Government Power: The original promise of the Obama stimulus was that it would, in Obama’s words “immediately jumpstart job creation.”  Instead job losses continued for ten more months and the job recovery has been tragically slow.

Business expansion and the job creation that goes with it have been curtailed by:

• Unprecedented government borrowing, spending and debt;
• Continuous threats of tax increases;
  
• A massive new government regulatory superstructure, including ObamaCare, financial regulation and restrictions on energy production;
  
• Subsidies to politically connected banks, Wall Street firms, unionized auto companies, and “green” industries.
  

The Bottom Line

Robust job growth is unlikely until Congress makes major progress on reducing the cost and regulatory burden of the federal government.  We must contact Congressmen and Senators and demand immediate action.

The message from President Obama, the Democrats and most of the media is that current deficits resulted from decades of tax cuts, and now, jacking up tax rates is the only “responsible” thing to do.  Anyone who opposes tax hikes isn’t serious about the deficit, they say.

One would never guess from listening to the tax complainers that the government collected more tax revenue in 2007, the fourth year of the current, Bush tax rates, than any previous year ever.

Had Congress spent just 6% less in 2007 the federal budget would have been in balance that year.

Government tax revenue is down since 2007 due to the financial crisis and severe recession that followed.  But the current tax rates generated seven of the top ten revenue years in US history.

The chart below tracks tax revenue and spending over the past 40 years.  Twice during that period there were major reductions in all tax bracket rates:

• the Reagan tax cuts of the early 80s, and,
• the Bush tax cuts of 2003.

In both cases tax revenue to the government had been declining before, and then increased after the tax cuts were implemented.

Spending increased continuously over the 30 years covered by the chart, consuming every dollar of increased tax revenue except for the brief period of budget surplus at the end of the 90s.  Those surpluses were due entirely to a spike in capital gains tax revenue generated by the dot-com stock market bubble.  When the bubble burst and stock prices dropped the capital gains windfall ended.  But the perennial increase in spending continued without a hiccup.

Not withstanding the assertions from Obama and the Democrats it’s not at all certain that:

• The tax rate increases on “the wealthy,” including two million small businesses, will generate more revenue than the current tax rates, or,
• Congress won’t immediately increase spending by an amount equal to or greater than any increase in tax revenue that may happen, with our without tax rate hikes.

But, they claim the Bush tax cuts were a give-away to the wealthy.  One gets the impression that the whole problem is declining revenue from top bracket taxpayers.  Again, as the chart shows reality contradicts the political-media establishment.

For 50 years the tax grabbers in Washington have used deficits to justify tax rate increases.  But they have almost always spent in excess of revenue, always creating the next deficit that justified the next tax increase.

The spending cut Vs tax hike debate will resume next week when the new session of Congress begins.  There is no guarantee but maybe this will be the moment when Republicans grow a spine and do what they  were elected to do: cut spending and just say no to tax hikes.

…we have a big deficit problem. We have a great jobs problem. Better to put the money into deficit reduction creating jobs than give it to the millionaires and billionaires.

Schumer ran two phrases together as if doing so made sense:

• “put the money into deficit reduction,” and
• “creating jobs.”

His obvious motive was to deceive the audience in 5 ways:

1. Schumer’s operating assumption, that a higher tax rate will produce more revenue, is not the verifiable certainty he wants you to believe it is.  As the chart shows, tax revenue from the rich declined from 2000 to 2003 when the tax rates Obama wants to reimpose were in effect.  Then, after the lower, Bush tax rates were enacted, tax revenue from the rich went up, not down, for four years.  Due to the financial crisis and recession, revenue from all tax brackets decreased in 2008, the latest statistics available from the IRS.
2. The phrase “deficit reduction,” when spoken by Charles Schumer is a meaningless slogan.  He has always supported massive spending initiatives, without any consideration of the deficit.  If he did care about the deficit he  would not have supported President Obama’s $787 billion stimulus, enacted 22 months ago on the promise that – somehow – it would create jobs.
   
3. There is no logical argument leading to the conclusion that a tax increase on high income people – who, as business owners and investors are the source of the capital that funds business start ups and expansion – will result in more jobs.  Leaving less capital in their hands can only result in fewer jobs.
4. By putting these two phrases together Schumer suddenly reversed his and Obama’s position of the past two years, that massive government spending of borrowed money was the formula for job creation and prosperity.  Indeed deliberate deficit spending to create jobs was the stated goal of the Obama stimulus!
5. The government will not, by maintaining the top tax brackets at the same rates that have been in effect since 2003, “give” money to millionaires.   The money in question belongs to the tax payer who earned it, not to the government.  The question is not how much to “give” to taxpayers, but how much of the fruits of their labors and investments will be taken away from them

The purpose of Goolsbee’s presentation is to persuade us that the failure of the Obama stimulus to create the millions of jobs that were promised is actually success!

Goolsbee begins by reminding us that job losses began during the Bush administration and blaming unspecified “policies”:

In 2007 we had followed a series of policies that had neglected making the critical investments that we needed for for economy.

He doesn’t name or describe any policies or any specific “investments.”  Apparently all we need to know is that Bush policies were bad because they were Bush policies and Obama policies are good because his borrowing and spending is “investments for the economy.”

This chart was generated in Excel from the same Bureau of Labor Statistics data Goolsbee displayed on his hand drawn white board chart.   The red bars track private sector job gains and losses from September, 2007 to through January, 2009, Bush’s last month in office.  The Blue bars track private sector job losses and then gains from February, 2009 when the Obama stimulus was enacted, through September, 2010.

The chart is intended to back up Goolsbee’s partisan rhetoric by showing the enormous job losses in 2008 followed by gradually shrinking rates of job loss and finally small job gains in 2009 and 2010.

It’s not hard to understand why the administration now offers a chart tracking private sector jobs instead of this chart tracking all jobs, private and public sector, that it promoted until a few months ago. If Goolsbee had used the all-jobs chart he would have had to explain why the statistics went negative four months ago.

Since June state and local governments have swamped anemic private sector job gains by laying off  thousands of employees even though the Obama Administration borrowed and spent hundreds of billions of dollars on the promise of preserving those jobs.

Goolsbee’s chart starts where it does, in September of 2007 because his intent is to plant the perception that the disastrous last year of the Bush Administration was typical of his entire eight years.

He hopes you’ll forget that President Obama’s agenda of massive government borrowing, spending and intervention into the private sector is, after almost two years, a failure compared to the Bush record prior to 2008.

This next chart shows the 48 months of continuous job growth immediately preceding the first month in Goolsbee’s white board chart.

So far, Obama’s massive “stimulus,” the health care takeover, and the commitment to tax increases on investors and small businesses starting in January have resulted in a stagnating economy and net loss of 3.3 million jobs since the stimulus was enacted in February, 2009.

Our last chart compares promises with actual results.  In January of 2009 President Obama published a report to hype his stimulus or “recovery act,” putting in writing some of the extravagant promises he was making in speeches and interviews.  Perhaps the most emphatic was the promise that the stimulus would create 3,675,000 jobs in 22 months, from March, 2009 through the end of 2010.  This chart compares that promise with actual results over the past 19 months and with job growth during the first 22 months after the Bush tax cuts were enacted in 2003.

An unbiased citizen with an open mind would look at this data and call for “policies” that would replicate the 51 months of job growth, from mid 2003 through the end of 2007, while avoiding the causes of the financial crisis. But that would require:

• Not enacting the tax increases Obama and the Democrats have planned for January.
• Repealing ObamaCare.
• Rolling back the draconian energy restrictions the Obama EPA is planning to impose on American businesses and consumers.
• Closing down the government owned mortgage giants Fannie Mae and Freddie Mac whose malfeasance led to the financial crisis and the grinding recession.
  
• Not borrowing and spending even more Trillions on so-called stimulus schemes.
  

This President flatly rejects any of these prescriptions because he is committed to “transforming this nation” to what he thinks it should be, a European style socialist state with an all-powerful central government.  He is quite willing to accept a flat or declining economy and permanent, high unemployment if that’s the price Americans must pay to implement his vision.

More private sector jobs have been created in 2010 than the entire Bush Administration.

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As the chart shows, the number of private sector jobs was about the same at both ends of the Bush Administration enabling the Democrats to now say no jobs were created.  But that simplistic political slogan doesn’t account for all that happened over those eight years, and hides the fact that there was a four year period of strong job creation, much stronger than anything we’ve seen this year.

Rather than deceptive slogans the voters deserve a sincere effort to discover what government policies are best for job creation, starting with a sober review of the downs and ups of the Bush years.

• Job losses began the month Bush was sworn in.  A total of 1.8 million jobs were lost in 2001 due to the dot.com recession and the 9-11 terrorist attacks.
• In late 2001 Congress enacted a schedule of tiny incremental reductions in tax rates to be phased in over four years. This proved ineffective and job losses continued through 2002 and into 2003.
• In May of 2003 Congress abandoned the incremental schedule and enacted new, substantially lower tax rates for all brackets.  These rates are still in effect today and are known as “the Bush tax rates.”
• Job growth began four months later, in September, and continued for 51 months for a total of 8.1 million new jobs.
• In 2008 the mortgage crisis brought on another recession and 4.4 million jobs were lost in Bush’s final year.

Obviously, 2008 was an economic nightmare.  But contrary to what Obama would have voters believe, there is simply no connection between the tax cuts of 2003 and the mortgage malfeasance that caused the economic crisis, the recession and the massive job losses of 2008 and 2009.  Nor is there any evidence that raising tax rates now will somehow help create more jobs or prevent another financial crisis.

The Democrats’ claim of superior job creation comes from comparing the best nine months of the Obama Administration with the entire eight years of the Bush Administration.  But that’s an apples to oranges comparison.  Apples to apples would be:

• Compare the entire Obama Administration so far, beginning with enactment of the stimulus in his third week, with the entire Bush Administration.  Obama’s record so far is a net loss of 3.8 million jobs Vs Bush’s net loss of about 700 thousand jobs.
• Comparing the best nine months of each Administration gives Obama credit for an increase of 863,000 private sector jobs while Bush gets credit for 1.8 million private sector jobs.

The chart below compares the first 20 months after enactment of the Obama stimulus with the first 20 months after enactment of the Bush tax cuts.

On Friday the Treasury Department published it’s final report for the government’s 2010 fiscal year, ending September 30.

During his presidential campaign, Barack Obama denounced the Bush Administration every day for “irresponsible deficits.”  This message resonated with many Republican voters and with the people who are now Teaparty activists.  The Republican had party had already lost control of Congress after much of its Conservative base declined to vote in the 2006 election.

Obama’s campaign web site included this attack on Senator McCain:

McCain Offers Four More Years Of Soaring Deficits. Just like George Bush, McCain budget plan offers four more years of soaring deficits…the non-partisan Tax Policy Center said McCain would add $3.2 trillion to the debt over the next decade…

We now know that a $3.2 Trillion increase in the debt over a decade would have been a bargain!

• The Treasury Dept. made it official Friday:  Obama and the Democratic Congress have added $3.6 Trillion to the debt in just two years.

• During his first two years Obama spent 34% more than Bush spent during his last two years.
• The President and the Democrats often blame military operations in Iraq and Afghanistan for all the red ink.  But in 2010 those operations cost a total of $171 billion or 5% of spending and 13% of the deficit.

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In their desperation Democrats and their media cheer-leaders have revived a campaign theme from the Obama presidential campaign.  The government is running gargantuan deficits, the story goes, because President Bush started wars but didn’t “pay for” them.

To help us debunk this claim, the Congressional Research Service, (CRS) the think tank that works exclusively for Congress, brings some perspective to the issue with a new, comprehensive report on the costs of three, on-going military operations that Bush initiated in response to the 9/11/01 terrorist attacks:

• Operation Enduring Freedom (OEF), Afghanistan and other counter terror operations
• Operation Iraqi Freedom (OIF), the invasion and subsequent operations over past seven years
• Operation Noble Eagle (ONE), providing enhanced security at military bases

CRS found war costs in the Defense Department budget, and in portions of several other department budgets, and added them all together for their report.

As of the end of fiscal 2011 the combined cost of all three operations will be $1.292 Trillion, over ten fiscal years, 2002 through 2011. (The 9/11 attack was 2 weeks before the end of the 2001 fiscal year.)

The implied assumption that there is a mechanism by which a military operation can be “paid for” separately from the rest of government is of course, hokum.  Government accounting does not report some bills paid with tax revenue and others paid with borrowed money.  Obviously, any attempt to at such reporting would set off heated political debate.   In reality, all tax revenue and all borrowed money goes into one pot, and all expenses are paid out of the same pot.

The chart further demonstrates the Democrats’ deception.

• During the Bush years deficits were 2.7 times more than war costs.
• Obama’s first two deficits total almost nine times more than war costs.
• If there were no war at all Obama’s first two deficits would still total $2.4 trillion, the largest in U.S. history, after adjusting for inflation.

The Obama government spends 23% of GDP, excluding the cost of the wars.

To put that in perspective consider the Vietnam era, when three to four times as many troops were deployed.  Back then total government spending, including the cost of the war, equaled 19% of GDP.

Consider World War II when ten times as many troops were deployed.  After adjusting for inflation Obama’s deficits, excluding war expenses, are 2.3 times as much as World War II deficits, including war costs.

Back in January President Obama made an assertion in his State of the Union message:

We can’t afford another so-called economic expansion like the one from the last decade –- what some call the lost decade -– where jobs grew more slowly than during any prior expansion…

Last Friday he addressed the Congressional Black Caucus and regarding jobs and employment he said of Republicans:

Their main strategy is they’re betting you’ll come down with a case of amnesia, that you’ll forget what happened between 2001 and 2009, what that agenda did to this country when they were in charge. And they spent almost a decade driving the economy into the ditch.

Obama and the Democrats speak of the Bush Administration with sneering contempt as if it were the most miserable eight years in all of American history.  Certainly there were some policies that were negative for employment and prosperity.  But Obama has continued and even expanded the negative policies, including bailouts and excessive spending, while planing to curtail what was positive for the economy, the across-the-board tax rate reductions for all income brackets.  Even though Bush and the GOP made some policy mistakes and misjudgments we still had a 51 month period of continuous job growth following the broad-based tax cuts of 2003.

Obama and the Democrats are now saying the onset of recession in Bush’s final year justifies raising top bracket tax rates to their pre-Bush levels.  They make no effort to connect the dots, to explain how lower tax rates could have caused the recession.

As we explained here Obama’s plan to raise top tax bracket tax rates starting January 1 is a plan to depress job creation by adding to the tax burden of 2 million of the nation’s most successful small businesses.

The President frequently brags about having created an average of 95 thousand private sector jobs per month since the beginning of 2010.  But, as the chart above shows the current rate of job creation lags way behind the rate we experienced after the tax cuts of 2003.

So-called economists in the Obama camp assure us the current recovery will get stronger and will surpass previous recoveries.  But to “catch up” with the Bush job creation record in time for the 2012 election would require private sector employers to create more than 6.8 million jobs in two years.  This has happened only twice since World War II.  The second time was 1984-85, the peak of the Reagan job creation recovery.

President Obama and Congressional leaders argue that “we can’t afford” to continue the existing income tax bracket rates for all taxpayers.

Obama insists that top bracket rates  go up even though this tax increase would specifically target the small businesses that create most of the new jobs in America.

When asked about deficits the President often blames military spending  saying that President Bush started wars without “paying for them.”

But as the chart shows most of the spending increases of the past decade were non-military increases.

Appearing on ABC’s This Week Austin Goolsbee, newly appointed Chairman of the President’s Council of Economic Advisers was asked about the wisdom of a tax cut in the middle of a deep recession:

The president has been all along, through the campaign, through the administration, quite clear on what I believe the economics is also quite clear, that borrowing $700 billion [over ten years] to extend tax cuts that average more than $100,000 a year to millionaires and even billionaires is the least effective bang for the buck we have.

What does this mean? 

First, Goolsbee wants us to believe Obama is trying to be frugal when in fact he’s the most profligate spender in human history.

Let’s assume the implied claim turned out to be accurate, that high income taxpayers, half of whom are small business owners, will pay $700 Billion less over the next ten years if their tax rates don’t go up.  That works out to $70 billion each year.  According to this President’s own budget projections he plans to:

• Spend $3.745 Trillion in 2011, another 8% or $275 Billion increase in one year.
  
• Borrow $1.5 Trillion in 2011.
  

Goolsbee insists that to avoid borrowing they must extract $70 billion more from the same 3% of taxpayers who already pay 50.1% of all income tax (2008 IRS data) even though half of them are the small business owners who create most of the jobs in America.  Does this mean  Obama thinks a $1.5 Trillion deficit is good but a $1.57 Trillion deficit is unacceptable?

Second, it means that spending cuts, even relatively small cuts are off the table.  Obama and the Democrats refuse to consider any cuts in spending, even adjustments in spending growth.

As the chart sh0ws, immediately upon being inaugurated Obama raised non-defense spending by 18.3%,  the largest one-year increase in 34 years.  He blamed Bush of course, but the same high level of spending continues this year.  His own budget projects increases every year for for another decade.

If Obama is really that worried about $70 billion why can’t he reduce his spending plans by $70 Billion, or about 2%?

Does anyone, even in Washington, believe 2011 spending can’t be reduced from $3,745,000,000,000 to 3,675,000,000,000?

Some of the Republicans have proposed shrinking non-defense spending back to the same as it was in 2008, saving six times as much as Obama claims his tax increase will generate. The political-media establishment will fight that sensible idea with all the sanctimonious consternation and deception they can produce.

This chart compares Weekly Unemployment claims in the second year of the Obama stimulus with the second year of the Bush tax cuts.

We’re half way through the second year of the $887 Billion “stimulus” that President Obama promised would, in his words, “immediately jumpstart job creation and long term growth.”

Obama and his supporters continuously blame President Bush’s “policies” for  current economic misery, without connecting the dots between specific policies and economic results.  Bush does have a mixed economic record, but one “policy” that turned out to be an unqualified success was the round of tax cuts enacted in 2003, reversing 31 months of job losses.

Even in the best of times there are always some layoffs.  But as the economy improved after the tax cuts of 2003 the number of job losses declined, the unemployment rate declined and the number of unemployment insurance claims declined.

The high number of claims every week since the stimulus was enacted, is one of several indicators of continued severe weakness in the economy, and the failure of current policies of massive borrowing, spending and expanding government intervention in the economy.

The current level of weekly jobless claims is inconsistent with a growing economy and predicts higher long term unemployment in the future.

The establishment politicians and commentators who make this claim expect you to conclude that the rich paid less income tax after the Bush tax tax rate reductions than before.   This chart, showing the most recent figures available from the IRS tells the truth.

As the chart shows, revenue from the top group was falling each year until the Bush tax cuts were enacted in 2003.  Then revenue increased every year until taxable small business profits were hit by the recession that began in 2008.

If government had collected less tax revenue from “the rich” – mostly small business owners – after the rate reductions they might deserve a share of the blame for deficits.  But in fact, the rich paid more – a lot more.

The establishment elite demonstrate their understanding of the disincentive effect of taxation when they call for taxes on choices and behaviors they dislike.  They advocate:

• Higher gasoline tax to “nudge” us out of cars and into mass transit;
• Taxes on sodas and sweets to keep us from getting fat and burdening their government dominated health care “system.”

But those same elites scoff at the obvious disincentives inherent in high income tax rates.   The income tax is a tax on risk-taking, saving, investment, and productive work – all the activities necessary for job creation.

Because higher rates on “the rich,” especially small business owners, discourage work, saving and investing, the people they are designed to target respond by curtailing business activities and thus earning less taxable income.   As a result, higher rates don’t necessarily generate more revenue.  Lower rates are less of a barrier to risk-taking, investment, business expansion and hiring, all the activities that generate more taxable profits.

In fact, as this chart shows, after the tax cuts of 2003 the deficit declined, as the rich paid more income tax.
This is not the first time higher income folks paid more income tax after a rate reductions.  During the Reagan Administration there was a series of phased in rate reductions from 1981-83, and another rate reduction in 1986.  The results:

• In 1980 there were eight tax brackets and the highest was 70%.   People earning more than $200,000 reported a total of $36 Billion in income and paid $19 Billion in tax.
• In 1988 there were only two tax brackets, 15% and 28%.  The over-$200,000 group reported $353 Billion in income and paid $99.7 Billion in tax.

Over eight years taxable income reported by “the rich” rose 881% and income tax collected from them rose 425%!  But even though the government was the beneficiary of this huge windfall the political-media establishment still promotes the deception that the Reagan tax cuts caused deficits.

With less than six months left before the mid-term election, President Obama and the Democrats appear to have contrived a deception they hope will overcome two major negatives:

1. The gargantuan “stimulus,” jammed through Congress before it was even printed, let alone read by the Senators and Representatives who voted for it, will add a Trillion dollars to government debt. But it did not deliver the immediate job creation results that were promised.  Instead, job losses continued for eleven months and the unemployment rate has soared much higher than promised.
2. Massive tax increases, especially on small businesses, the engine of job creation, are set to begin next January.

The disinformation campaign targeting voters who don’t have the time or the inclination to pay close attention to political news or to dig out the truth behind the soundbites has begun.  Over the weekend we saw a preview as talking heads repeating a new soundbite, paraphrasing a claim first made last week in the National Journal:

There will be more job creation in 2010 than in the entire eight years of the Bush Presidency

The intended message is that tax cuts – Bush’s job creation initiative – didn’t work, while the borrow-and-spend stimulus did.  But the facts presented below contradict this deceptive message.  First, a quote from the source of the sound bite the National Journal article:

From February 2001, Bush’s first full month in office, through January 2009, his last, total U.S. nonfarm employment grew from 132.5 million to 133.5 million, according to the Bureau of Labor Statistics. That’s an increase, obviously, of just 1 million. From January through April of this year, the economy created 573,000 jobs. Over a full year, that projects to 1.72 million jobs.

Some, but not all the data that make this claim far less profound than it seems are mentioned later in the article.  Of course none of the details will ever be supplied by propagandists who will repeat the soundbite a thousand times between now and election day.

To present the whole story we begin with a review of the Bush Administration jobs record

• 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.

Another recession and the financial crisis hit in 2008 and 4.4 million jobs were lost by January, 2009 when the Bush Administration ended.

So without trying to either promote or criticize President Bush, an objective summary of his eight years would be:

• 32 months of job loses, totaling 2.6 million, caused by the dot-com recession and the 9-11 terrorist attacks,
• 51 months of job growth following the 2003 tax cuts, totaling 8.1 million new jobs.
• 13 months of sharp job losses, totaling 4.4 million, due primarily to the financial crisis.

Obviously, Bush made plenty of mistakes, and the final year of the his Administration was an economic nightmare with soaring unemployment.  The debate continues over the cause of the financial crisis, whether it was government malfeasance through the Federal Reserve, Fannie Mae and Freddie Mac, or the simplistic “greed on Wall Street” we hear from Obama.  But nobody can possibly make a case that the tax cuts of 2003 somehow caused the banking crisis and job losses of 2008.

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.

But Obama and the Democrats are invested in raising, rather than lowering tax rates, and expanding the power of government through huge spending increases.  Their hope is to exploit the generally negative public attitude toward George W. Bush and prevent voters from examining the data or remembering that more than four years of continuous job growth followed the tax cuts of 2003.

Another point of dishonesty in the National Journal article is the apples to oranges comparison. The article judges the Bush jobs record from the beginning of his administration, when the economy was already in recession.  If Obama were judged on the same standard he would now be at minus 3.4 million jobs.  But the National Journal scores Obama at Plus 573,000 by starting the count in his 12th month, even though his policy response, the trillion dollar stimulus, was enacted in third week of his Presidency, on the promise that it would, in his words, “immediately jumpstart job creation.”

I am very optimistic about — about Iraq. I mean, this could be one of the great achievements of this administration. You’re going to see 90,000 American troops come marching home by the end of the summer. You’re going to see a stable government in Iraq that is actually moving toward a representative government…I’ve been impressed how they have been deciding to use the political process rather than guns to settle their differences.

Greatest achievements of this administration?  Astounding!

Most of the communication from the Obama White House is deception, targeting people who don’t have the time or interest to dig into every issue and root out the truth.  But this creates a disingenuous category of it’s own.  The truth is that in 2007 and 2008 Then Senator Obama used his office to try to cause the Iraq operation to end in failure.

When the surge strategies that ultimately succeeded were beginning Senator Obama could have seized the opportunity to be an idealistic, visionary leader in the cause of liberty for the Iraqi people, and victory for America.  Instead, he deferred to the defeatist dogma of those in his party who desperately wanted failure in Iraq, to vindicate their position, that “Bush’s war” was an irreversible disaster. In a TV interview Candidate Obama fell back on the simplistic chants of the anti-war Left:

We cannot impose a military solution on what has effectively become a civil war. And until we acknowledge that reality — we can send 15,000 more troops, 20,000 more troops, 30,000 more troops, I don’t know any expert on the region or any military officer that I’ve spoken to privately that believes that that is going to make a substantial difference on the situation on the ground.

In July, 2007 as the intense combat phase of the surge strategies and initiatives was in full force, and the troops deserved unqualified support from the home front, Senator Obama appeared on The Today Show and said:

My assessment is that the surge has not worked and we will not see a different report eight weeks from now.

Obama repeatedly tried his best prevent success in Iraq, first by introducing legislation that would have aborted the surge just as it began, and by twice voting to withdraw funds for the Iraq operation, even as US troops were engaged in daily combat.

As for Joe Biden, let’s not forget his idea, to Divide Iraq into three or four countries, one for each ethnic sub-group.  Thankfully our troops were never ordered to facilitate that train wreck.

Is there a word strong enough to properly characterize Biden’s chutzpa in now the success of the Iraq operation for Obama?