Neal Boortz: Bush tax cuts didn’t create the deficit | ajc.com

Neal Boortz: Bush tax cuts didn’t create the deficit

By Neal Boortz

For The AJC

One of the most noxious and irritating sounds on the face of this earth (other than the sound of Sarah Palin’s voice) is the noise made by a Democrat sheep bleating endlessly about the “Bush tax cuts, Bush tax cuts, Bush tax cuts.”

One such Democrat, Congressman Xavier Becerra of California, crawled out from a smoke-filled den of irrationality to appear Wednesday on “Your World with Neil Cavuto” on Fox News.

The discussion concerned how to address the budget and debt negotiations that dissolved into chaos Thursday.

The question: “What ideas do you have to reduce the deficit?”

Becerra’s response? The Bush tax cuts caused the deficit.

When Cavuto asked him about cost cutting, Becerra again said, “’But you can’t just say disregard the thing that drove us into the large deficits; the Bush tax cuts!” No matter how many times Cavuto asked the question the answer was the same: Bush inherited a surplus and brought us deficits with his tax cuts.

Sen. John Kerry (D-Mass.) is quoted as saying that the Bush tax cuts “[took] a $5.6 trillion surplus and turned it into deficits. ...”

Is that true? If we were to actually crunch the numbers would they show that Bush really did blow a surplus and bring us bigger deficits?

Time for a little painful truth.

The surplus? It never existed. It was never there. The surplus was nothing more than a prediction by the Congressional Budget Office in 2001 as to what was going to happen over the next 10 years. This prediction was based on several assumptions.

First, the economic growth of the late 1990s and the growth in the Dow would continue generating record tax revenues.

Second, the surplus prediction was based on the improbable idea that discretionary spending would fall to levels last seen in the 1930s. The CBO prediction also failed to take into account terrorist attacks and the resulting wars in Afghanistan and Iraq.

Now, the tax cuts. Brian Riedl, a research fellow at the Heritage Foundation, points out that if you take Kerry’s imaginary $5.6 trillion surplus and work your way to the predicted $6.1 trillion deficit for 2011, you have a 10-year swing of $11.7 trillion. Riedl crunches the CBO numbers from January 2001 until the present and finds that the Bush tax cuts for the evil rich amount to just 4 percent of that swing. So much for Becerra’s “blame the Bush tax cuts” angle. Sorry, Xavier.

Here’s something else you might not remember about the Bush tax cuts. Congress thought it would be a good idea to phase these tax cuts in over several years. Didn’t work. The economy continued to shed jobs, so the Congress decided to let the tax cuts take effect immediately, and threw in a cut in capital gains and dividends to boot. It worked. Eight million jobs were created and tax revenues increased.

Did you catch that? Tax revenues increased after a tax cut. Democrats just hate this, but increased revenues are the norm after tax cuts. Why? Because tax cuts spur economic growth. The CBO said that the Bush tax cuts would lower 2006 revenues by $75 billion. Oops! Wrong again! Revenues actually increased by $47 billion. What about jobs? In the 18 months before the Bush tax cuts our economy lost 267,000 jobs. In the 18 months following the cuts it added over 300,000 jobs. In the next 19 months another 5 million jobs were added.

This doesn’t just work for Republicans. Kennedy cut taxes with similar results, as did Bill Clinton. (Of course Clinton had a Republican congress pushing for the tax cuts.)