In this morning's Economix Blog, the NYTimes' David Leonhardt asks the rhetorical question: 'Were the Bush Tax Cuts Good for Growth?'
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.
The competition for slowest growth is not even close, either. Growth from 2001 to 2007 averaged 2.39 percent a year (and growth from 2001 through the third quarter of 2010 averaged 1.66 percent). The decade with the second-worst showing for growth was 1971 to 1980 — the dreaded 1970s — but it still had 3.21 percent average growth.
He then shows how even by breaking growth into 5 year chunks, the Bush era still comes out at the bottom:
Leonhardt, who I usually find to be lukewarm in either support for Democrats or criticism of Republican policy, then really lays into it:
I mean this as a serious question, not a rhetorical one: Given this history, why should we believe that the Bush tax cuts were pro-growth?
Is there good evidence the tax cuts persuaded more people to join the work force (because they would be able to keep more of their income)? Not really. The labor-force participation rate fell in the years after 2001 and has never again approached its record in the year 2000.
Is there evidence that the tax cuts led to a lot of entrepreneurship and innovation? Again, no. The rate at which start-up businesses created jobs fell during the past decade...
There's a little more, it's a short piece, but I think both the visual evidence and Leonhardt's scathing analysis make it abundantly clear how Bush successfully laid the foundation for Depression II:
- The tax cuts shifted tax burdens to the middle and lower classes.
- Wealth gravitated and accumulated towards the top.
- Less and less money was available in the pockets of consumers to help the economy.
To those of us living in reality, the above facts are inescapable.
It's too bad Boehner and the rest of the pro-Bush tax cut GOP shills don't live in reality.