“If we could get something that would be a long term stimulative to the economy, by bringing down the deficit, I want to talk about it. I’m focused on the deficit reduction,” said Senator Clair McCaskill, Missouri Democrat on Tuesday. Democrats and Republicans continue to battle out details on the small business lending bill. While Republicans want to see Bush era tax relief extended for both middle and higher income brackets, Democrats are looking to only extend the previous administration’s middle class tax cuts.
“If you go back in history and look at when these tax cuts were enacted under Bush and even under Reagan, they were not stimulative. They did not create jobs Sixteen months in one case and two months in another, we had negative job creation after these tax cuts were enacted, so I think it’s a specious argument that this top bracket, that this 3 percent of the tax payer, that it’s somehow going to have a dramatic impact on the economy,” said Ms. McCaskill.
When I mentioned that President Bush’s tax cut’s did not hike the unemployment rate above 5.5 percent, Ms. McCaskill defended her stance saying, “That’s because when the tax cuts were enacted it didn’t reduce the unemployment. You find me an economist that tells you that this tax differential for three percent of the tax payers is going to make a huge difference in economic activity? I’ve not heard any economist say that.”
That’s an awfully confident thing to say coming from a Senator who voted for the failed so-called stimulus package. Wasn’t that supposed to bring our unemployment rate down by now. The only thing that was “stimulated” was the growth of unemployment numbers which now stands at 9.6 percent.
As far as job creation following the Bush tax cuts goes, According to the National Center For Policy Analysis, three years following three tax cuts that President George W. Bush signed into law, resulted in the following:
Employment, Jobs, and Productivity4
Though job creation was slow immediately following the recession and during the first stages of the recovery, it had increased dramatically by late 2002 and 2003.
1.4 million jobs were added in the nine months after August 2003 (the 2003 tax cuts were signed into law in late May 2003).
The unemployment rate remained steady at 5.6 percent in May 2004, well below its peak of 6.3 percent a year ago.
The Treasury Department estimates that without the tax relief, as many as 1.5 million more Americans would be out of work right now, and the unemployment rate would be well over 7 percent.
The job growth statistics are particularly noteworthy because of greater-than-expected increases in productivity levels-high rates of productivity tend to mean less employment:
Productivity grew at a 4.6-percent annual rate in the first quarter of 2004, continuing the trend of large gains in productivity since 2001 due to investments in equipment and technology.
Higher productivity increases incomes and keeps inflation in check.
Senator McCaskill can continue to beat up on the job creators in the private sector, as she denies them any recognition that they are the engine who keep the economy going, but it will not help more American incomes get any higher nor push unemployment numbers any lower.