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 1988.

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.

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…

These charts compare the effect on employment of two, fundamentally opposite, government strategies.  First the Obama stimulus of 2009, then 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 tax rebates to almost everyone, even those who paid no taxes, and a five-year schedule of tiny, incremental tax rate reductions that began in 2002. These measures proved ineffective and job losses continued.

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 reductions, 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.”

When the June jobs report was published last Friday President Obama put the best face on a negative situation:

Our economy has created about 600,000 private sector jobs this year.  Make no mistake, we are headed in the right direction…

But the original promise of the so-called stimulus was that it would, in Obama’s words “immediately jumpstart job creation.”  Instead job loss continued for ten more months.  After the tax cuts of 2003 job losses continued for only two more months.

• Total job growth in months 11 – 17 of the Obama stimulus: 593,000

• Total job growth in months 11 – 17 of the Bush tax cuts: 922,000

The Bottom Line

As we reported here when the stimulus was enacted, there is no historical data leading to the conclusion that profligate government borrowing and spending results in job growth in the private sector.  This is primarily because dollars spent by the government must be taxed or borrowed from the private sector.  But there are three examples in recent history when large, broad based reductions in graduated tax rates did result in job growth.

• In the 1960s under Presidents Kennedy and Johnson
• In the 1980s under President Reagan
• from 2003 – 2007 under President Bush.

AND, each time tax rates were reduced, tax revenue collected by the government increased.

Nobody, not even the most blindly partisan commentators try to claim that the economic crisis of 2008 – 2010 was caused by, or made worse by the tax cuts of 2003.

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?

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’s tax plan would add $3.2 trillion to the debt over the next decade…

We now know that would have been a bargain.  Obama and the Democratic Congress will add more than $3.2 Trillion to the debt in just two years.

• The 2009 Deficit was greater than all seven Bush deficits combined.  (There was  a surplus in Bush’s first year, 2001.)

• Obama’s first two deficits, 2009 and 2010 will be greater than the last 13 deficits combined.

Today, the Treasury Department published the final budget numbers for Fiscal Year 2009, ended September 30, giving us an opportunity to compare Obama’s first deficit with those “irresponsible Bush Deficits.”  In the chart above the numbers for 2009 come for today’s treasury report and the numbers for 2010 come from the White House Office of Management and Budget’s Mid-Session Review, published in August.

The 2009 deficit is greater than the last four Bush deficits combined.

President Obama’s first two deficits will total 37% more than all seven Bush deficits combined.  (There was a surplus in 2001.)

Hoping to dodge accountability, Obama and his crew always claim they “inherited” the 2009 deficit.  But half of this year’s deficit is due to the TARP program that bailed out insolvent banks, car companies and AIG.   TARP was enacted by Congress in the final weeks of the Bush Administration.  But then Senator Obama spoke out forcefully in favor it, and voted for it, as did almost all the Democrats in Congress.  Obama took the initiative to spend out the second half, which had not been spent by the time Bush left office.

Obama added to the deficit with the massive “stimulus to create or save 3 to 4 million jobs.”  Record high job losses prove the stimulus to be failure.  In fact, the economy has lost 3.4 millions jobs since the stimulus was enacted.

Along the way, the Democratic Congress has added to the 2009 deficit by padding appropriation bills that should have been passed in the Summer of 2008, but were held over until 2009.

Had President Obama and the Democrats been serious about the deficit they could easily have held it below $700 Billion.

During his Presidential campaign Barack Obama continuously assailed “irresponsible Bush deficits” and warned that John McCain would increase the debt by $4.3 Trillion over ten years.

Obama Deficits

As the table shows, his plans will increase the debt by almost that much within just two years.

Since this is the same establishment media and politicians who complained bitterly about the “Bush deficits being passed on to our children and grand children,” one wonders how Obama’s supporters and the Democrats in Congress can be  so sanguine about the Obama Administration’s numerous, urgent, borrow-and-spend initiatives.

In another of the President’s many nonsensical assertions, clearly targeting for deception those who are uninformed,  he claims almost daily that his spending is a change from “borrow-and-spend to save-and-invest.”  Obviously,  this is preposterous.

Obama is doing exactly the same thing Bush and all previous Presidents did.  He is borrowing money and spending it.  His initiatives do not qualify for the label “investment.”

The continental shelf is the gently sloping undersea plain from the shoreline of a continent to deep ocean. The US has jurisdiction over the the Continental shelf from shoreline to at least 200 miles, and in some regions up to 350 miles.  Coastal states have jurisdiction over the first four miles.  The Outer Continental Shelf (OCS) starts at the limit of state jurisdiction and extends to the limit of federal jurisdiction.

Any oil production platforms on the OCS would be many miles out, over the horizon, and not visible from shore.  Nobody’s ocean view would be degraded.  The oil spills of decades ago are no longer a genuine risk.  Even when Hurricane Katrina roared through the Gulf of Mexico, where there are scores of oil production platforms, there were no leaks or spills at all.

Before today, there were two bans on exploring and drilling for oil in the OCS: An executive order signed by the First President Bush, and a Legislative ban, enacted into law by Congress in 1981.  Today, President Bush lifted the executive ban.  Only Congress can lift the Legislative ban.

If the ban were lifted the government could lease sections of the OCS to oil companies.  Those companies would then use their own resources, not taxpayer resources to explore the leased sections to determine how much oil was available.  In those sections where they found deposits of oil large enough to warrant the investment, they would install drilling platforms, and extract the oil – again, at their own expense.

Predictably, The Democrats in Congress reiterated their stone-wall resistance to producing more oil in the United States.  Their excuse is that new exploration and drilling would take many years and thus, could not result in lower gas prices immediately.

What they fail to disclose is most of the delay would be caused by the pre-production bureaucratic permitting requirements imposed by government, and lawsuits launched by so-called “environmental groups” who have advocated higher gas prices for decades, and don’t want any oil production anywhere, under any circumstances.

In one stroke, Congress can pass legislation that lifts the ban, streamlines and simplifies the permitting process, and, invalidates lawsuits.

Nancy Pelosi said “Once again, the oilman in the White House is echoing the demands of Big Oil,” apparently referring to the fact that both the President and Vice President have had some experience in the oil industry.  Speaker Pelosi refers darkly to “demands” when only thing “Big Oil” asks is for permission to use their own resources to extract oil from the OCS!  In other words, oil companies “demand” permission to produce as much oil and gasoline as Americans customers are willing to buy!

The government allows Starbucks to sell as much coffee, and Apple to produce as many ipods, as customers wish to buy.  Someone should ask Speaker Pelosi: Is the government “meeting the demands” of Starbucks and Apple by not restricting their production?

On Thursday President Bush was invited to speak before the Israeli Parliament in honor of that nation’s 60th anniversary. Typically, the national media paid little attention to a speech by this President whom they despise until Barrack Obama arose in sanctimonious indignation, claiming that the last paragraph of the this portion of the speech was an “appalling attack” on him:

“The fight against terror and extremism is the defining challenge of our time. It is more than a clash of arms. It is a clash of visions, a great ideological struggle…This struggle is waged with the technology of the 21st century, but at its core it is an ancient battle between good and evil.

“The killers claim the mantle of Islam, but they are not religious men. No one who prays to the God of Abraham could strap a suicide vest to an innocent child, or blow up guiltless guests at a Passover Seder, or fly planes into office buildings filled with unsuspecting workers….

“There are good and decent people who cannot fathom the darkness in these men and try to explain away their words. It’s natural, but it is deadly wrong. As witnesses to evil in the past, we carry a solemn responsibility to take these words seriously. Jews and Americans have seen the consequences of disregarding the words of leaders who espouse hatred. And that is a mistake the world must not repeat in the 21st century.

“Some seem to believe that we should negotiate with the terrorists and radicals, as if some ingenious argument will persuade them they have been wrong all along. We have heard this foolish delusion before. As Nazi tanks crossed into Poland in 1939, an American senator declared: “Lord, if I could only have talked to Hitler, all this might have been avoided.” We have an obligation to call this what it is — the false comfort of appeasement, which has been repeatedly discredited by history.”

Are these thoughts controversial? Hitler was indeed encouraged by British appeasement. The lesson of history seems abundantly clear. Yet Senator Obama lashed out as if The President had criticized him, directly, as if Obama disagreed with the notion that the false comfort of appeasement had been discredited by history. 

“That’s exactly the kind of appalling attack that’s divided our country and that alienates us from the world,” Obama stormed.

Appalling attack? President Bush didn’t mention any names but Obama apparently thinks the shoe fits him.

The subject of Presidential meetings with unfriendly foreign leaders and sponsors of terror has come up in several Democratic debates. Obama has steadfastly insisted that as President he would indeed meet and talk with the leaders of governments who sponsor terrorism. Obama’s website says:

Obama is the only major candidate who supports tough, direct presidential diplomacy with Iran without preconditions.

Later Obama told an audience at a campaign event:

“That’s the Bush-McCain record on protecting this country. Those are the failed policies that John McCain wants to double down on, because he still hasn’t spelled out one substantial way he’d be different from George Bush when it comes to foreign policy.”

Obama certainly begs some questions.

• Can Obama identify and describe these “policies” that are so bad? Apparently, he cannot.
• How does he conclude that unidentified Bush policies failed to protect the country? There have been no follow-up terrorist attacks since 9-11, even though terrorist experts said there would be. Several terrorist plots have been discovered and derailed.
• What should the agenda be for a meeting between an American President and a sponsor of terror like the leaders of Syria or Iran? What American positions or principles would be negotiable? Obama doesn’t say.
• What would be the expected outcome of a meeting? Does Obama believe his own campaign hype, that he soars above mere politics, that he’s a Messianic figure who can persuade these thugs to abandon their 60 year old determination to destroy the state of Israel? Does Obama believe he has, in the President’s words, “an ingenious argument will persuade them they have been wrong all along”? Obama apparently doesn’t seem to know what he would hope to achieve.

Obama’s absurdly simplistic campaign position is that we should vote for him because:

1. Bush policies are “bad,” because they are Bush’s policies.
2. McCain is Bush, and will thus continue those unidentified “bad policies”
3. Therefore squandering the prestige of The Presidency on meetings with thugs and sponsors of terror will be “good.”

A President is the temporary steward of The Presidency, the most powerful office in history. A president must be prudent in investing the capital of The Presidency. Wise Presidents have used the prestige of the office to honor and reward America’s friends and allies. Wise Presidents have withheld direct Presidential recognition from enemies and leaders of rogue governments.

A direct meeting with a maniacal thug like Ahmadinejad of Iran would diminish the world’s perception of the prestige and weight of The Presidency. Abaminijad would boast to the Arab world that he was important and powerful enough to force the American President to ask for a meeting with him.

One has to wonder if Obama is really as naive as he has appeared to be this week, or if this was just cynical campaign stunt to capture a few seconds of TV coverage and deceive people who don’t have the time or inclination to look behind the headlines.