Bush Tax Cuts: Where Was the Growth?

[one...two...tree 2,762]

I say kudos to Erick Erickson for not simply relying on lazy anti-tax rhetoric and actually attempting to delve in and make the case that the Bush administration’s tax policies led to; good macroeconomic outcomes. Unfortunately, this kind of analysis doesn’t tell you very much: “More crucially, after the 2001 initial tax cuts, the annual growth rate went from 0.3% in 2001 to 2.5% in 2002. By 2004, GDP growth was the highest in 20 years.”

It's true, Bush took office at the tail of a recession and then the recession ended and the economy was growing. But as my colleague Michael Ettlinger and EPI's John Irons detailed in their excellent September 2008 paper "Take a Walk on the Supply Side" if you compare the Bush era to the relatively high tax Clinton era it looks quite bad:

One frequent thing to do is to measure economic activity from business cycle peak to business cycle peak. And we see that the era during which Bush's tax policies prevailed was the first in which median household income declined:

In essence, we're looking at the worst peak-to-peak economic performance ever, followed immediately by the worst recession since World War II.

http://yglesias.thinkprogress.org/

Edited July 27, 2010 by El Buscador

[slim 1,528]

So basically what this is saying is the employers simply pocketed the money?

The two charts show wages and median household income, neither one of which has to do with overall economic growth.

The main statement out of all that story was "GDP in 2004 was highest in 20 years." You can spin it however you like, but things were moving during Bush's years.

[one...two...tree 2,762]

I didn't originally post the entire article. I've now edited it to include the full text.

[slim 1,528]

I didn't originally post the entire article. I've now edited it to include the full text.

Are you going to edit it to show that it's basically a bogus article?

[mendeleev 68]

The two charts show wages and median household income, neither one of which has to do with overall economic growth.

The main statement out of all that story was "GDP in 2004 was highest in 20 years." You can spin it however you like, but things were moving during Bush's years.

Ummm, to quote a famous president, "Facts are stupid things". But the fact is that total GDP growth in the 2000-2008 was not particularly good compared with the previous 20 or 25 years. On average, it was the worst performance in that time frame. Things weren't moving for the economy as a whole or for the middle class. (The source for my GDP data is the St. Louis Fed, an unimpeachable source.)