How, exactly, is the Bush tax plan working?

I really want to know

Published on February 18, 2005 By NJforever In Politics

We all probably know about the Bush tax plan; decrease taxes on the rich so they will purchase more/increase supply. Well, my family has benefitted from these tax cuts, and, if we are an example, I really don't see how this is working.

As I said, I don't see how this plan is working. Though I am grateful for the tax cut, our spending hasn't really increased since Bush took office. Therefore, we're aren't "stimulating the economy" or anything. If we are an example, then this plan really isn't helping anything. Perhaps my family is strange. But perhaps not.

Maybe it's because my family only just barely qualifies. Maybe we ARE strange. Maybe it's because we are only upper middle class. But, unless someone can provide me some evidence that this is working (and please do! I would love to hear that me spending money is helpful

), I can't really support a plan that my experience shows isn't working.

Comments (Page 5)

drmiler

on Feb 26, 2005

But as to how Slick Willie got his surplus? He's dead on. He got it by cutting back and cutting back some more on the US military.

The facts don't support that claim, doc.

Federal receipts increased. That's what balanced the budget. In other words: growth, Clinton's 1993 tax increase, & probably even GHWB's 1990 (?) tax increase were factors. Not military cuts. Not much anyway.

Repeat: GHWB's last budget (FY 1993) shows $291B for defense; Clinton's last budget (FY 2001) shows $305B. The low point in between was $266B in FY 1996. And many of those Clinton-era cuts were savings from project cuts started by GHWB & his defense secretary Dick Cheney. For more info, see Link

Where you in the military at that time? Maybe you should talk to someone who was. Our military was at an ALL time LOW during his admin as far as both men and machines were concerned.

Draginol

on Feb 26, 2005

Ultimately, left wing belly-acheing about the deficit represents why they are so impotent: They want to bitch but they don't want to do anything constructive.

People like me are already paying the lion's share of the taxes, thanks. We're taxed enough. Your ability to bitch and moan on this website can be directly attributed to the Bush tax cut. Raising taxes isn't the answer.

Cutting defense during the war on terror doesn't make sense either.

And liberals don't want to see their welfare programs removed or cut.

Since conservatives (like me) are prepared to live with deficit spending and debts as long as they stay within a certain level as a % of GDP then liberals can only do what they do best - complain in impotence.

COL Gene

on Feb 26, 2005

The interest is paid on the cumulative debt. The amount of interest as a % of the budget will climb because of the increase in the total debt and because interest rates will not stay at the 46 year low. At $500 Billion, the interest will dive the annual deficit off the scale. Add making the tax cuts perminant and funding the private accounts for Social Security and the funding needs of Medicare including the prescription drug benefit that has no funding source and there will be BIG TAX INCREASES COMMING. When China and Japan either stop buying our bomds or demand much higher interest rates the "you know what" will hit the fan!

ProgressiveUSA

on Feb 26, 2005

Doc, that's a non-sequitor. We're talking budget & taxes & fiscal responsibility, not military morale. Changing the subject doesn't change the facts -- and the facts don't support your budget claims.

draginol wrote:

Ultimately, left wing belly-acheing about the deficit represents why they are so impotent: They want to bitch but they don't want to do anything constructive. People like me are already paying the lion's share of the taxes, thanks. We're taxed enough. Your ability to bitch and moan on this website can be directly attributed to the Bush tax cut.

Drag, ultimately, the facts don't support your claims either. You claimed the harm deficits & the natl debt create was only theoretical, then disappeared when I demonstrated their real-world basis.

Real conservatives, like Sen Rudman, understand this stuff. Remember Ronald Reagan 'belly-aching' about the deficit when it was only $50B a year? Was it an expression of his 'impotence' then?

As for doing something constructive, that's hollow rhetoric. The something constructive was already in place: Clinton produced record surpluses for GWB to build on. Instead GWB gave away the store as tax cuts. Period.

Ideology cannot trump facts. You cannot go on borrowing forever. Unless, of course, you skip town and change your name.

COL Gene wrote:

Add making the tax cuts perminant and funding the private accounts for Social Security and the funding needs of Medicare including the prescription drug benefit that has no funding source and there will be BIG TAX INCREASES COMMING. When China and Japan either stop buying our bomds or demand much higher interest rates the "you know what" will hit the fan!

Well, first there will be a hike in interest rates to attract bond buyers. Then we'd probably have a slowdown due to a tight money supply, then budget cuts harming the old, the sick & the weak (as Drag apparently would like to see). THEN, when that's not enough, we'll get the tax increase after maximum damage has been inflicted.

Remember: Even Ronald Reagan raised taxes to reduce the deficit & keep SS funded -- twice.

COL Gene

on Feb 26, 2005

Bush 41 also increased taxes. All 43 wants to do is cut more. When a policy does not work for Bush, he tries some more of the same. Look at trade. He pushed China, now 1/3 of the trade deficit is because of China nad now he wants to expand the same trade policy that has failed to work for 12 years!

drmiler

on Feb 26, 2005

docmiller wrote:

Where you in the military at that time? Maybe you should talk to someone who was. Our military was at an ALL time LOW during his admin as far as both men and machines were concerned.

Doc, that's a non-sequitor. We're talking budget & taxes & fiscal responsibility, not military morale. Changing the subject doesn't change the facts -- and the facts don't support your budget claims.

Did I say *anything about morale? How can a *machine* have morale? In case you couldn't figure it out I was talking sheer numbers. So, NO it';s not a non-sequitor! Nice try, now try AGAIN!

ProgressiveUSA

on Feb 26, 2005

Did I say *anything about morale? How can a *machine* have morale? In case you couldn't figure it out I was talking sheer numbers. So, NO it';s not a non-sequitor! Nice try, now try AGAIN!

OK, I'm listening. You don't need to get snippy.

How about providing some numbers & sources to back up your claim? And please tie budget into it, while explaining how the GHWB/Cheney cuts (that I linked to twice) were not a factor. TIA

T B

on Feb 27, 2005

TB, you are mixing up the yearly federal deficit & the cumulative national debt.

I don't believe I am.

Not sure where you're getting your deficit vs GDP numbers, but I suggest you use this source

Thanks for the source (I DL'd it). The numbers I used is from the CBO which can be found here Link. Deficit GDP % numbers cited in the first part of my post are from Table 11 at the above link.

The point was that the current deficit as a % of GDP is not either earth shattering or unusual, which is also substantiated by your source.
Using the numbers from your source, in 21 of the 75 reported years (28%), the TOTAL (the number commonly reported) deficit as a % of GDP exceeds the '04 deficit. When almost 1/3 off all budgets for 75 years exceed the current deficit, it is hardly obvious there is a "CRISIS". Additionally, it should not be ignored that EVERY PRESIDENT since 1920 has increased deficit spending in times of a recession.

For the purpose of a time value budget/money discussion, dollar amounts are not particularly useful or intellectually honest. Budgets are generally dealt with in terms of percentages, not dollar values (if it was about dollar numbers, we'd just print more of them - which has happened before ala Jimmy Carter and 18% inflation).

In dollars, Clinton's FY 2001 budget left GWB a record surplus to work with. GWB now has record deficits. That's a fact.

Once again, dollars as a measure is not intellectually honest. Record surplus is not correct, nor is record deficit. In 2001, per your source, there was a -.3 % of GDP on-budget deficit, not surplus, and a TOTAL budget surplus of 1.3 % of GDP (for which there are 5 years which exceeded this number, for the on-budget number there are even more which exceed it). The reason I'm making a distinction between on-budget and TOTAL, is because someone on another post was ranting about the "dishonesty" (attributed to GW) of reporting the TOTAL budget deficit in order to portray it in a more favorable light (which has generally been going on for 70 years).

Below is a graph (hopefully, if it links right) showing deficit as a % of GDP, which makes it pretty clear the '04 deficit is no record.

As mentioned the cuts were not that steep: 10 percent from GHWB's highest to Clinton's lowest in 1996

Dollar amounts again. In '93, as a % of GDP, discretionary defense spending was 4.4%, in '99 -'00 it was 3 %. Had defense spending just been held flat, the '01 dollar amount would have been $442 B (4.4% of $10,057

compared with the $301 B (3% of $10,057

it was, or 32% less. In my view, that's significant. Dollar amount? $141 B less than if spending were flat. What was the Dollar amount of the surplus? (Total budget number for '01). It was (using your spreadsheet) 1.3% of $10,057 B = $130.7 B, which is LESS than dollar amount defense spending was reduced, if held flat. It certainly does not seem unfair to say the "surplus" was achieved by cutting defense, particularly because the international and domestic discretionary spending numbers were effectively held flat (see the CBO link, Table 8). Far and away the largest cuts in discretionary spending, during the Clinton era, came from defense.

The GROWTH in GDP under Clinton is what's remarkable

Hard to quibble with that, though the cumulative number isn't really helpful (GDP needs to outpace inflation). They were excellent, ranging from 5% to 6.4% GDP growth (up until '00). However, the final year, growth went in the tank as recession hit (from '00 to '01 it was only 3.6%). In comparison, the GDP from '03 to '04 (again numbers provide from your source) is a whopping 6.6% (exceeding ANY Clinton era yearly growth number) and achieved with TAX reduction, not hikes.

All in all, the liberal talking points about crisis, doom, et. al. still remains nonsense. I'm not thrilled with the deficit, but not shocked or dismayed either (particularly in light of real historical perspective). It is neither the best of times, or worst, despite what either party would like you to buy into.

How's that for objectivity?

Better than most.

T B

on Feb 27, 2005

Is there someway to insert a graphic into the post? (instead of linking to it?)

sandy2

on Feb 27, 2005

Hmm I didn't see the country dropping the ball and allowing 9/11 to happen with him as the head of the military. Nor did I see him invading a country half way aroudn the world, costing more lives (of the America variety, by the way) than even those lost to the attacks of 9/11.

Draginol

on Feb 27, 2005

Drag, ultimately, the facts don't support your claims either. You claimed the harm deficits & the natl debt create was only theoretical, then disappeared when I demonstrated their real-world basis.

You didn't demonstrate ANY real-world basis. You just regurgitated additional theoretical damage. Please feel free to re-post any real world harm that is actually occuring - right now - that is being missed. Talking about what MAY happen is theoretical.

Draginol

on Feb 27, 2005

As for doing something constructive, that's hollow rhetoric. The something constructive was already in place: Clinton produced record surpluses for GWB to build on. Instead GWB gave away the store as tax cuts. Period.

This is intellectually dishonest beyond belief (and ignorant to boot). If you followed this stuff, even remotely, you would realize that the deficits were not caused by the tax cuts. We had deficits again in 2001 for crying out loud. Remember? What Bush tax cut was affecting it then?

The bulk of the deficits was caused by spending increasing faster than the economy was growing. Economic slow-downs greatly affect deficits. Moreover, a good chunk of the budget surplus could be thanked to capital gains taxes -- i.e. the DOT-COM explosion which collapsed...(wait for it)...in 2001.

You are so blinded by your ideology, "progressive", that you can't apparently be bothered to look into this stuff. Frankly, I don't normally waste my time on people who think the tax cuts, that barely came into effect until last year, were the cause of the deficit or thinking that Clinton somehow, magically, made a surplus.

We had a surplus in the late 90s because we had a very strong economy and an incredible stock market which increased federal receipts at a much higher pace than normal which resulted in a surplus.

Moreover, you liberals never seem to come up with a real solution. Since "my side" is willing to tolerate deficits and your side isn't willing to cut social programs, guess what the result is going to be? Deficits. Raising taxes, even back to where they were, would not eliminate the deficit (even if you pretend that the higher taxes wouldn't negatively affect the economy - and they almost certainly would).

COL Gene

on Feb 27, 2005

The deficit is far worse then Bush is telling us. First he has not included most of the Iraq War cost and he counts the Surplus in Social Security and Medicare to lower the deficit. The real deficit this year is about $675 Billion. The interest is moving toward $500 billion each year. That would solve the Social Security and Medicare problems with money to spare. Instead we pay it out in interest on the $7.6 Trillion of the national Debt!

drmiler

on Feb 28, 2005

TB, you are mixing up the yearly federal deficit & the cumulative national debt. They're different things.

Not sure where you're getting your deficit vs GDP numbers, but I suggest you use this source: Link

In dollars, Clinton's FY 2001 budget left GWB a record surplus to work with. GWB now has record deficits. That's a fact.

He may be wrong about the actual numbers. But as to how Slick Willie got his surplus? He's dead on. He got it by cutting back and cutting back some more on the US military. Face it, under himour military was at an all time low!

Hmm I didn't see the country dropping the ball and allowing 9/11 to happen with him as the head of the military. Nor did I see him invading a country half way aroudn the world, costing more lives (of the America variety, by the way) than even those lost to the attacks of 9/11.

Your math stinks! We lost over 3000 lives in the 9/11 attacks. We have lost approximatly 1500 in Iraq. And just an FYI since the attacks happened in 2001 more than likely they were planned under Slick Willie's watchful eye in 2000 probably.

ProgressiveUSA

on Feb 28, 2005

Drag wrote:

You didn't demonstrate ANY real-world basis. You just regurgitated additional theoretical damage. Please feel free to re-post any real world harm that is actually occuring - right now - that is being missed. Talking about what MAY happen is theoretical.

Incorrect. See post #34.

Drag wrote:

We had deficits again in 2001 for crying out loud. Remember? What Bush tax cut was affecting it then?

Sounds like you are counting 'on-budget' only. Fine: Clinton's on-budget deficit was $32B. That's <0.05% of GDP. Still kicks the bejesus out of the $567B deficit (5% of GDP) in 2004. Good luck finding another 3 yr period with that steep a drop.

Drag wrote:

If you followed this stuff, even remotely, you would realize that the deficits were not caused by the tax cuts.

Incorrect. Using the yardstick you like (% of GDP), GWB's tax cuts put most of the hole in the deficit.

Per TB's source (Link), Clinton's budget receipts typically ran 19 - 20% of GDP. under GWB overall receipts dropped from 19.8 of GDP in 2001 to 16.3 percent in 2004. Six-sevenths (or ~85%) of that drop came from a drop in individual income tax receipts -- from 9.9% of GDP in 2001 to 7.0% in 2004.

You are so blinded by your ideology, "progressive", that you can't apparently be bothered to look into this stuff.

Again, incorrect. I've provided source after source, link after link. You furnished, what, one chart? And even using your preferred yardstick, I've shown your assertions to be incorrect.

Moreover, you liberals never seem to come up with a real solution.

There's that hollow rhetoric again. Repeat: Clinton balanced the budget for the first time since 1960 after the massive Reagan & GHWB deficits. And despite a hostile Congress. What's not 'real' about that?

in addition, Al Gore's advanced a modest tax cut in 2000. And Sen Kerry proposed rolling back part of GWB's tax cut -- not all of it.

Look, I agree medical costs in the US are out of control. But it's just as broken in the private sector as in the federal budget. And, if anything, the ($400B, now $540B, now $725B) prescription drug bill demonstrates that the GOP -- today -- is the party of big govt special interest giveaways.

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