Wednesday, September 01, 2004

President Bush's tax cuts should not be made permanent

Why you're right:

1. They've blown a hole in the federal budget. The president's own budget analysis proves that tax cuts are the primary reason why, in less than four years, the federal government has gone from running record surpluses to running record deficits. Extending tax cuts would add an additional $1.5 trillion dollars to the deficit over the next 10 years. (Government Executive, New York Times)

2. They're unfair. The top 20 percent of earners received 69.8 percent of President Bush's tax cuts. Millionaires received an average tax cut of $123,000. Those in the bottom quintile of earners received an average tax cut of $27. Those in the second to bottom quintile received an average cut of $317. (CBPP)

3. They haven't delivered promised job growth. The president's counsel of economic advisors predicted that, as a result of the recent tax cuts, the economy would create 306,000 jobs each month beginning in July 2003. Since that time, the economy has created 2,565,000 fewer jobs than they predicted. (Job Watch)

Why they're wrong:

1. Conservatives argue that extending tax cuts will spur economic growth. But tax cuts for the wealthy are an inefficient way to encourage economic growth. Wealthy people don’t need to spend money and often don’t. That means it takes longer for the money to filter into the economy. If the decreased revenues are at all offset by decreased spending – as Bush claims is his intention – it is even more inefficient, since the federal government’s contribution to the economy is reduced.

2. Even if you accept that tax cuts create economic growth, that isn’t the only thing we should be concerned about. We should be concerned with the type of economic growth it creates. The last four years have proven that the president’s policies create a society with more millionaires but many more people in poverty and struggling to make ends meet. We should adopt an economic policy that benefits a broader spectrum of America.