Bill O'Reilly and the Imaginary Bush Tax Cut Windfall
demanding more stimulus spending. And this guy teaches economics at Princeton University? Unbelievable.
People like Bill O'Reilly don't pay any mind to the fancy pants Nobel Prize committee that gave Krugman one of their liberal awards. Why should he? He knows how the economy really works, as he explained last night (8/8/11):
Raising income taxes is not the way out of this. In 2001 and again in 2003, President Bush cut individual tax rates. And what happened? Well, from 2004 until 2008, tax revenue increased from about $800 billion to almost $1.2 trillion. That blows away the liberal argument that tax cuts starve the government of revenue. They don't.
This has been, at times, a talking point among conservatives. But you don't really get a sense of tax revenue without comparing it to something-- as FactCheck.org noted in a piece in 2007 (when John McCain was saying much the same about the Bush tax cuts), revenues tend to increase every year as the economy grows.
A more useful measure would be how tax revenue looks relative to the size of the economy. As the Economic Policy Institute put it in a recent report (6/1/11) on the 10-year anniversary of the Bush cuts:
• Federal tax revenue fell from 20.6 percent of GDP in FY2000 (the last year of the 1991-2000 expansion and reflective of
Clinton-era tax rates) to 18.5 percent of GDP in FY2007 (the last year of the Bush economic expansion and reflective of
Bush-era tax rates).
• From 2001 through 2010, the cuts added $2.6 trillion to the public debt, nearly 50 percent of the total debt accrued
during this period.
• The decade of the Bush tax cuts had, on average, lower revenue levels as a share of the economy than any previous
decade since the 1950s.
That would be (part of) the "liberal argument" against the Bush tax cuts--and it doesn't appear to be "blown away" by O'Reilly's too-good-for-Princeton economic analysis.