Shades of Iraq: Selling Bush's Economic Program

Somebody once said, "There are three kinds of liars: liars; damned liars; and statistics." The adage couldn't be more true than when listening to George Bush and his Republican minions trying to justify ever more tax cuts for the rich - his "base" as he calls them.

In a speech to the U.S. Chamber of Commerce last week, John Snow, Secretary of the Treasury, declared, "The U.S. economy is the picture of economic health and we remain, as the president often notes, the economic envy of the world."

Somebody once said, "There are three kinds of liars: liars; damned liars; and statistics." The adage couldn't be more true than when listening to George Bush and his Republican minions trying to justify ever more tax cuts for the rich - his "base" as he calls them.

In a speech to the U.S. Chamber of Commerce last week, John Snow, Secretary of the Treasury, declared, "The U.S. economy is the picture of economic health and we remain, as the president often notes, the economic envy of the world."

Bush, himself, was in Illinois telling the Economic Club of Chicago that it was his tax cuts that had done the trick. "The Congress must make the tax cuts permanent," he concluded.

But let's not forget, this is the same George Bush and company who sold the country on the war in Iraq based on phony stories of Weapons of Mass Destruction and lies about Iraq's complicity in 9/11. His sales job about the state of the economy and his tax cuts relies on the same kinds of distortion and hyperbole.

Is the economy, in fact, so sound? And were Bush's tax cuts really that successful? Let's look at the facts.

In fact, the Bush recovery has been one of the weakest ever recorded. "By virtually every measure, the economy has performed worse in this business cycle than was typical of past ones," reported the Economic Policy Institute.

For example, GDP growth since the bottom of the 2001 recession has averaged 2.8%. But it grew at an average rate of 3.5% over the prior six recoveries. Or consider jobs: 1.3% more jobs under Bush versus 8.8% more during earlier upswings.

Private sector jobs, a metric one would assume to be close to a Republican's heart, fared even worse: up only .8% since 2001 versus an average of 8.6% for past recoveries. Investment? Up 3.6% as a result of Bush's policies compared to the 8.2% average for the six earlier rebounds.

Pick your measure - growth, jobs, income, investment, spending - the recovery based on the Bush tax cuts is one of the weakest ever recorded. And the reason is obvious.

Bush's tax cuts have gone overwhelmingly to the very richest of Americans. Of $1.7 trillion in total cuts, $578 billion or 33% went to the top 1% of income earners according to Citizens for Tax Justice. The top 20% of income earners received 71% of all tax cuts.

If you use the tax code to shift money to millionaires, they only spend a small portion of it. The rest sits in the bank, buys a trip to Tahiti, or chases new investments in Hong Kong or Singapore. Little of it is spent. This is not class warfare as Bush likes to claim. It is an empirical statement. How many Mercedes' can you drive at one time, anyway?

On the other hand, if you give tax relief to the poor and middle class it goes right back into circulation. And fast. School clothes for the kids, a new transmission for the car, fix the roof, groceries, health care, higher gas bills-you name it, the money gets spent. This, too, is an empirical statement.

The truth is that neither the logic nor the actual data matter to Bush. As far as he's concerned, the only problem with the American economy is that the rich don't have enough. His latest tax cut, just enacted, cost the treasury $35 billion. A full 97% of it went to people earning $200,000 or more per year.

When he was running for president and there was a huge budget surplus, Bush proposed cutting taxes on the rich. They needed more money. But when his policies blew the Clinton surplus and produced the largest budget deficits in history, his reaction? Cut taxes on the rich. They need more money.

Trade deficits approaching three quarters of a trillion dollars a year? Cut taxes on the rich. They need more money. GM and Ford closing 19 factories? Cut taxes on the rich. They need more money. Intel, Cisco, Hewlett-Packard, and IBM all building multi-billion-dollar plants in China? Cut taxes on the rich. They need more money.

Five airlines and the country's largest auto parts maker in bankruptcy? Cut taxes on the rich. They need more money. Three million high-wage manufacturing jobs lost in four years? 44 million Americans without health insurance? Crude oil at triple the price of only four years ago? One out of six American children raised in poverty?

This is what John Snow seems to think is "the picture of economic health...the economic envy of the world." The only thing left to do? Cut taxes on the rich. They need more money.

And did the rich really need more windfalls from the government, after all? In 1980, the top 20% of income earners brought in 44% of the nation's income. Last year, their share was 50.1%, more than everyone else in the economy combined. The growing inequality of wealth is even more dramatic. In 1976, the top 1% of families controlled 22% of the nation's wealth. In 1998, their share had almost doubled, to 38%.

Meanwhile, the household income of average Americans has fallen five years in a row - the first time that has ever happened. At the end of 2004, it was still 3.6% below where it was when Bush took office. In wealth terms the situation is even worse. The bottom 40% of families have been wiped out. They collectively own less than 1% of the nation's wealth. Bush's solution? Cut taxes on the rich. They need more money.

The most vulnerable, the bottom 20% of Americans, have been especially hard hit. Their incomes are 8.7% below 2000 levels. 5.4 million more people are in poverty since Bush took office. Hunger has risen 43% since 1999, reports the USDA. Bush's answer? That's right. Cut taxes on the rich. They need more money.

So, while the merely fabulously rich are now getting pharoically rich thanks to the help of the government, and everybody else is getting poorer, the only policy Bush can manage to conjure up is to give the rich still more money.

This, of course, is why he calls them his "base," and why, in fact, they are. In return for his funneling them trillions of dollars of tax relief, they happily recycle millions of dollars back into Republican campaign coffers. The cost to the "base" of purchasing these trillion dollar windfalls is less than pennies on the dollar. It comes to a $48 return for every penny invested. Wouldn't you "invest" in such a windfall if you could?

Worst of all, this abysmal record has resulted in the largest debts in the country's history. Bush turned a $126 billion surplus from Bill Clinton into a $158 billion deficit in his first year. When he took office, the national debt stood at $5.8 trillion. It now stands at $8.1 trillion and is projected to hit $10 trillion by 2008 when Bush's "work" is done.

Those debts will have to repaid by our children. The costs of repaying them will mean their standards of living will fall, perhaps precipitously. For paying back Bush's debts will mean they cannot, at the same time, make the investments in infrastructure, education, and research and development that created past prosperity.

We should be clear. The economic "recovery" (such as it is), has virtually nothing to do with Bush's tax cuts for the rich. Rather, it is the result of the historically low-interest rates engineered by the Federal Reserve (courtesy of money loaned the U.S. by China), and the huge fiscal stimulus created by the largest budget deficits on record.

But any moron with a hand full of credit cards charged off to the next generation's children can fake the impression of prosperity, at least until the bills come due. And that is all the Bush "recovery" amounts to: using the nation's credit to spend money it doesn't have and that someone else's children - yours - will have to pay back. And all of this, so that Bush can play Santa Claus the way he plays at being a cowboy and so that the rich - Bush's base - can engorge itself further on still more of the nation's wealth.

The war in Iraq will end one day. The worst of the lies - and the liars - that sold it have already been smoked out, if not yet held to account. But the wreckage of Bush's economic policies will drag down the economy for decades to come. The lies that have sustained these policies are still aflight. It's time to confront those lies - and the liars that tell them - before they can inflict still more damage on the country.

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