Columns » Ernest Dumas

The Bush economy

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You trust the Bush administration’s figures, don’t you?

Here is what the Bureau of Labor Statistics in George W. Bush’s Labor Department says has happened to the economy and specifically to American workers from the time he took office in January 2001 until the first of this month:

In four years and nine months, the Bush economy added a grand total of 1,607,000 jobs to the employed force of 132,454,000. Of the 1.6 million new jobs, the Labor Department says, slightly more than 1 million were government work. That is from the man and the party who were going to shrink government and give the taxpayer more bang for his buck. American business added a net of fewer than 600,000 jobs. By and large they were not very good ones.

How can you resist a comparison? A total of 1.6 million new jobs, most of them in government, were added in nearly five years of Bush, but a net of 22.7 million went to work in new jobs during the eight years of Bill Clinton.

You can examine all those statistics and even sadder historical ones on the Bureau of Labor Statistics’ web site. These nearly five years have been the worst in terms of jobs since the Great Depression. Job creation is far off the pace of young people entering the workforce, and average wages and per-capita income are slipping badly behind price growth.

Why bring all that up now? Similar but older figures were thrown around in 2004 and voters chose Bush anyway.

Here’s why: Judging by the debate in Congress over budgets and taxes this month, you would think that the Bush/Clinton job figures were reversed, just as Bush had predicted in 2000. Remember when candidate Bush promised to cut taxes and unleash the great job-creating engine of American business that had been held in a hammerlock by the Clinton government?

Backed by the White House, Republican congressional leaders are trying to extend more of the early Bush tax cuts and add new ones to the budget reconciliation legislation or else in a fresh tax bill if they falter in the reconciliation process. Specifically, they want to extend the big reductions in income tax rates on stock dividends and capital gains in the Bush omnibus tax law of 2003. The tax cuts, which reduce the tax rate on dividends and capital gains to 15 percent (from 35 percent on dividends and 20 percent on capital gains), are set to expire in three years if Congress does not extend them.

A Republican senator actually said last week that the tax cuts needed to be extended to continue the terrific job-creating performance of the economy under Bush. The White House insists that the tax cuts have stimulated investments (the administration no longer talks about jobs). It is true that business investment picked up in 2003 as the recovery from the short 2001 recession picked up a little steam, but no independent economist would argue that it had much if anything to do with the tax cuts.

When was the last time there was a big surge in investment (far stronger than this one)? Why, it was after Bill Clinton’s tax increase on corporations and the investor class in 1993.

Economists can disagree but that may not be an anomaly. Clinton’s tax increase and spending discipline put budget deficits on a downward spiral, which brought down interest rates, stimulated investment and created more jobs than any comparable period in history.

Bush’s four rounds of tax cuts reversed that trend and sent deficits spiraling out of control. The peril now is that the mushrooming deficits will suck up national savings, raise interest rates and stymie investment.

If handing the Waltons, Gateses and Tysons more and more tax cuts is not creating millions of new jobs after all, we are left with the issue of simple fairness.

The Bush administration’s statistical tomes are helpful on that, too. Try the Treasury Department’s breakdown of 2003 income taxes, which went up on the IRS’s web site. It helps you figure out how the dividend and capital-gains cuts land on the various tax classes. Here’s a broad analysis: Nearly all of the tax cuts went to the rich and most of them to the very rich. Citizens for Tax Justice used them to project the tax cuts in 2009 for people in each state.

Here are the Arkansans who Bush and the Republican leaders think deserve relief: Roughly 57 percent of all the tax relief flowing to Arkansas will go to some 9,000 people whose income exceeds $200,000 a year. Their average income that year would be $774,000 and their average tax cut would be $24,514.

The poorest fifth of taxpayers — these are 225,000 workers who actually file returns — would get not a penny. The next fifth, with average incomes of $21,800, would get seven-tenths of one percent of all the tax savings, a princely seven bucks per family on average, although the savings would go only to those with capital gains and dividends.

And how many jobs do you think the Walton heirs will create with their new wealth that they cannot create with the $100 billion they have now?

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