Myth #1
The Bush/congressional tax cuts vitalized the economy, created jobs, and sustained the economy
Based on the Census Bureau Report for 2008, the Atlantic concluded in an article Closing the Book on the Bush Legacy:
On every major measurement, the Census Bureau report shows that the country lost ground during Bush's two terms. While Bush was in office, the median household income declined, poverty increased, childhood poverty increased even more, and the number of Americans without health insurance spiked. By contrast, the country's condition improved on each of those measures during Bill Clinton's two terms, often substantially.
As far as GDP growth goes, Bush's policies were hardly impressive:
Economist David Johnston of Syracuse University offers a blistering critique of the Bush years at tax.com:
The tax cuts did not spur investment. Job growth in the George W. Bush years was one-seventh that of the Clinton years. Nixon and Ford did better than Bush on jobs. Wages fell during the last administration. Average incomes fell. The number of Americans in poverty, as officially measured, hit a 16-year high last year of 43.6 million, though a National Academy of Sciences study says that the real poverty figure is closer to 51 million. Food banks are swamped. Foreclosure signs are everywhere. Americans and their governments are drowning in debt....This is economic madness. It is policy divorced from empirical evidence. It is insanity because the policies are illusory and delusional. The evidence is in, and it shows beyond a shadow of a reasonable doubt that the 2001 and 2003 tax cuts failed to achieve the promised goals.
Myth #2
Droopy tries to fall back on Reagan to make his point about tax cuts:
Government revenue nearly doubled during the Reagan years in the eighties, for precisely this reason, dwarfing revenues under the Carter administration where rates were much higher.
If Droopy knew anything about tax history he wouldn't have to be told that Reagan actually raised taxes at times. According to Reagan's close friend, Sen. Alan Simpson,
In 1982, the Tax Equity and Fiscal Responsibility Act, that rolled back about a third of his ‘81 tax cuts, raised corporate tax rates, and to a lesser extent income tax rates. Raised taxes by almost 1 percent of GDP, which at that time was the largest percentage in peacetime increase ever.
[The] 1982 gas tax increase. [The] 1983 Greenspan commission — we know so well; [fellow commission member Alice Rivlin] remembers — we all … raised payroll taxes for lower and middle income households to higher than they were before Reagan’s ‘81 tax cuts. Then there was the 1984 deficit reduction tax.
Those are the big four. Then there was the Railroad Retirement Revenue Act, Consolidated Omnibus Budget of ‘85… ‘85…’87 Continuing Resolution, Omnibus Budget Reconciliation Act of ‘87, that was $8.6 billion
And then Krugman puts the Reagan myth into perspective:
The Reagan economy was a one-hit wonder. Yes, there was a boom in the mid-1980s, as the economy recovered from a severe recession. But while the rich got much richer, there was little sustained economic improvement for most Americans. By the late 1980s, middle-class incomes were barely higher than they had been a decade before — and the poverty rate had actually risen...Eventually productivity did take off — but even the Bush administration’s own Council of Economic Advisers dates the beginning of that takeoff to 1995
What Droopy also fails to acknowledge is that Clinton's economy saw similar growth after increasing taxes - so that fact alone refutes his pet theory that high taxes = lower revenues. Reagan also tripled the national debt from what it was under Carter, and then Bush senior came along and quadrupled it.
Tax rates as high as 90% (but usually around 70%) since WWII up until Carter, is what helped drive down the deficit at such a fast pace. Reagan was also responsible for doubling the Federal deficit, and then Bush came along and tripled it. Clinton came along, increased taxes, which pushed down the deficit and gave us our first surplus in decades, and then Bush blew it all to hell within a few years of more tax cuts and stupid wars.
Moreover, economists attribute the Reagan era recovery to the drop in interest rates, not tax cuts. The federal funds rate peaked at 20 percent in late May 1981 and dropped to 9.5 percent by mid-October 1982, while the discount rate peaked at 14 percent in early May 1981 and dropped to 9.5 percent in mid-October 1982. In 1983 the CBO declared: "Lower interest rates after mid-1982 permitted the recovery to begin... A dramatic decline in inflation, a fall in interest rates from levels that were extraordinarily high to levels that are merely high, and the stock market boom have contributed to the improvement in economic conditions." Even Reagan economist Michael Mussaagrees:
[dropping interest rates] "signal[ed] the beginning of what would become a four-and-a-half-year period of quite rapid monetary expansion. During this period, interest rates, both short and long term, would be driven significantly lower, and the U.S. economy would substantially recover from the devastation of both inflation and recession."
So it makes sense when Paul Krugman points out that: "Right now, the interest rate is zero. The Fed can't rescue us this time, and that's why we can't do the things we did in the '80s."
Oh, and before Droopy shoots back with the usual Right Wing excuse that Congress was to blame for Reagan's outrageous spending, the facts prove he requested more funding than what Congress was willing to appropriate:
But don't expect to find out about this from anything published by Heritage! Because the evidence is clear that "Tax and spend Reagan" is what they'd call him today, if more of his worshipers were fully aware of his policies.
Myth #3
The higher marginal tax rates go, the less government revenue is generated, and the lower tax rates go, the more revenue flows to the treasury.
This claim is so idiotic and so easily refuted, one could easily provide a dozen economists rejecting that failed theory. In fact the demise of it is so well known it speaks volumes about just how selective Droopy's exposure to political commentary really is. Where has this retard been the past half decade, living in a cave listening to Glenn Beck? That is the only attention Art Laffer can seem to get anymore.
Of course shoving facts and expert opinion in Droopy's face will just trigger the usual dismissals, claiming "leftist" bias. So let's see how he handles the same opinion coming from conservative economists. N. Gregory Mankiw, Harvard University economics professor and former chairman of President Bush's Council of Economic Advisers, wrote: "Some supply-siders like to claim that the distortionary effect of taxes is so large that increasing tax rates reduces tax revenue. Like most economists, I don't find that conclusion credible for most tax hikes, and I doubt [then-Treasury Secretary Hank] Paulson does either." Be sure to click on the link to see another half dozen conservative voices acknowledge the demise of this failed theory.
