Curtis Media’s right-wing afternoon squawker on Raleigh’s WPTF radio, Bill LuMaye, got rather agitated last Thursday, November 9, at the prospect of the new Democratic Congress and the prospect of serious efforts to halt further federal tax cuts on the rich:
“It’s like the tax cut thing too. That drives me crazy. There are actual… and I know it, I know it. You people are out there going ‘these tax cuts are bad.’ Even though, every time it’s tried, every time, Republicans, every time, every single time!!, not an exception anywhere, every time!! People get to keep their money. They spend more money. They buy more products. People hire more people to make the products. And everybody’s makin’ more money. And everybody, you now — more people working. The people are selling – the businesses – more tax revenue. Every time! It’s like how many times can you have this argument when, there it is? Not only does it make perfect sense, it’s backed up by facts! And yet – it’s a lot of the same folks with the minimum wage – they go ‘well the tax cuts are bad.’ And of course they’re not.”
“I don’t know about you – you guys must be making tons of money out there. I mean – the rich today – and I keep hammering this ‘cause it’s so astounding to me. Those evil rich people with the tax cuts — family of four – fifty thousand bucks – tax cuts — right now you’re paying two-thousand dollars less in taxes. Why would you want to change that? I mean, I think that’s good. And according to even the New York Times, so you know it’s gotta’ be true — it’s in the New York Times for goodness sakes. Tax revenues – record levels coming into the treasury. Why? ‘Cause tax cuts. Tax cuts gooood – not bad.”
Reality Check # 1: Economic Growth – It’s obviously and demonstrably false to claim that every tax cut results in economic growth. But, to be fair, let’s take a look at the Bush tax cuts. Despite major tax cuts in 2001, 2002, 2003, and 2004, the economy’s recent performance has been far from stellar. Growth rates of GDP, investment, and other key economic indicators have been below the average for other post-World War II economic expansions. In particular, wages and salaries have grown more slowly in the current economic recovery than in all but one previous recovery since the end of World War II. In addition, while the Administration boasts of its record on jobs, private-sector employment growth has been weaker in the current recovery than in all but one previous post-World War II expansion.
Reality Check #2: Tax Revenues – LuMaye’s assertion about record tax revenues is, not surprisingly, out of context. According to the latest data, after adjusting for inflation and population growth, federal tax revenues have not even returned to the level they reached more than five years ago. Real per-capita revenue growth since the current business cycle started in March 2001 has been negative.
Though revenues have rebounded slightly this year, the nation’s budgetary position has deteriorated more in the past six years than in all but one other six-year period since World War II, going from a surplus of 2.4 percent of GDP in 2000 to a deficit of 1.9 percent of GDP in 2006.
Reality Check #3: Impact on the Middle Class – Two-thousand dollar tax cuts for families making $50,000? An October 6 Citizens for Tax Justice report shows that a North Carolina household making between $35,900 and $57,400 will realize an average net gain in 2006 of less than half that amount. Moreover, “because the cuts are being paid for with borrowed money, the cost of paying the added national debt more than wipes out any benefits from the tax cuts for 99 percent of North Carolinians.” The real beneficiaries? Over the 2001-2010 period, the wealthiest one percent of North Carolinians will receive 29.2 percent of the cuts.
Sources: Center on Budget and Policy Priorities, “Tax Cuts: Myth and Realities,” October 12, 2006.
Citizens for Tax Justice, “The Bush Tax Cuts: Are North Carolinians Better Off?” October 2006.