United for a Fair Economy: "As outrage in Congress stalls the Bush administration's attempts this Thanksgiving season to extend tax cuts that will primarily benefit the wealthy, a new study, 'Nothing to Be Thankful For: Tax Cuts and the Deteriorating U.S. Job Market' (available on the web at (http://www.faireconomy.org/press/2005/ThanksgivingReport_pr.html), examines the administration's claim that tax cuts create jobs--and finds it without merit.
Evidence shows that, historically, changes in tax rates have no discernible effect on employment. Moreover, during the Bush administration, job creation since 2003 has fallen millions of jobs short of the administration's promises, and is significantly below what would normally be expected even without extraordinary economic stimulus.
'Contrary to what President Bush and his tax policymakers are saying, tax cuts do not automatically create jobs. Tax cuts are just one of many things that can affect job growth,' said Liz Stanton, director of research at United for a Fair Economy (UFE) and a co-author of the report.
'President Bush's Jobs and Growth Tax Relief Reconciliation Act of 2003, far from delivering on the promises made to create 5.5 million new jobs, has carved out a new low in job recovery after a recession.' said Scott Klinger, another co-author and director of UFE's tax policy group. 'The president's tax-cutting policy is a failure in this regard, and we need to recognize it as such.'"
[UPDATE 11-16-05] And there's
more negative evidence you say?
The EPI study goes on to provide charts, bells and whistles measuring all this six ways from Sunday. The series of major tax cuts enacted in the past four years has not strengthened the economy. Every broad measure -- GDP, jobs, personal income and business investment -- has fared worse over the period than in previous cycles, contrary to Republican predictions. It turns out the one tax cut that really did help snap the recession early was that middle-class tax rebate the Democrats stuck into the Bush bill.
OK, bad news. So, what did happen to all that money from tax cuts that was supposed to go into investment? It didn't go into higher wages -- that's the factor that accounts for the generally dismal public perception of this economy. People don't see their income going up. Well, shareholders got more. Executives continued to get staggering pay packages. The increases range from obscene to excessive. I'll say this for America's corporate executives, they certainly weren't cowed by the Enron, Tyco, etc., scandals. There were a lot of stock buy-backs and acquisitions, but not much investment that creates jobs.
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