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Tax Cuts are a Real Turkey for the Economy
by Liz Stanton, Research Director, United for a Fair Economy
22 Nov 2005
On Thanksgiving Day, families across the country will sit down to turkey
dinners and contemplate what they have to be thankful for. One blessing that
everybody needs is a good job - or jobs, in this day and age - to put bread
on the family table. President Bush agrees that creating good jobs is a
priority. He has repeatedly promised that his large-scale tax cuts will
grow the economy and create new jobs. So should families planning their
Thanksgiving feasts be giving thanks to the tax cuts for having created a
plethora of new jobs?
Resoundingly, no. The Bush tax cuts did not produce new jobs. In 2003, the
President's Council on Economic Advisers promised 5.5 million new jobs by
2004, but only 2.6 million jobs were actually created. The jobs created
failed to even match the 4.1 million new jobs expected in a normally
functioning economy, let alone one supposedly supercharged by tax cuts. Yet
that hasn't stopped conservative forecasters from chanting the "tax cuts
create jobs" mantra in 2005.
The quality of jobs, measured by income, health insurance and retirement
benefits, has also declined appreciably since the 2001 tax cuts. Between
2000 and 2004, inflation-adjusted family income declined, and the number of
U.S. workers covered by employer-provided retirement benefits and health
African-American and Latino families have seen their economic security
deteriorate even faster than white families. Despite the president's
statement that tax cuts would create jobs for all who want them, the racial
economic divide has widened. African-American unemployment remains about
twice as high as that of white workers. And the earnings gap between white
workers and workers of color has grown even steeper since the 2001 tax cuts.
One of many reasons that tax cuts are a shaky formula for increasing jobs is
that tax cuts mean less government revenue and therefore fewer public-sector
jobs. Some tax revenues are spent hiring government workers - direct job
creation - as well as purchasing goods and services from private businesses
- indirect job creation. Tax cuts may eventually stimulate investment that
may generate some new jobs, but less government revenue will eliminate jobs
at the same time, offsetting any positive job growth.
Tax cuts are an unsound prescription for job creation and economic good
health, and more and more people recognize that relentless tax cutting, far
from creating new jobs, has instead created a staggering deficit that
threatens our children. Asked in an April 2004 CNN poll to choose between
the 2003 tax cuts and a job creation program, 76 percent of respondents
chose jobs; 50 percent chose deficit reduction over tax cuts; and 60 percent
said they had not benefited from tax cuts.
The wisdom of the people's choice is reflected by the conservative chairman
of the Federal Reserve, Alan Greenspan, who said: "We should not be
taxes by borrowing...We do not have the capability of having both productive
tax cuts and large expenditure increases, and presume (sic) that the deficit
doesn't matter." (November 4, 2005). In contrast, the Chairman of the
President's Advisory Panel on Federal Tax Reform, Connie Mack, had this to
say in a recent interview in the New York Times Magazine:
Interviewer: Well, the U.S. government has to get money from somewhere. As a
two-term former Republican senator from Florida, where do you suggest we get
Mack: What money?
Interviewer: The money to run this country.
Mack: We'll borrow it.
What have tax cuts given us to be thankful for? Nothing. The 2001 and 2003
tax cuts were a feast for the rich taken directly from the tables of the
poor, the working class, the middle class, people of color, children and the
elderly. Tax cuts made in the name of jobs that have not and will not
materialize reveal a government acting in service of the voracious appetite
of the very richest people in the United States. The Bush administration's
promise that tax cuts for the rich would trickle down to workers has been
broken. And when tax cuts and more tax cuts haven't succeeded in job
creation or economic stimulus, how can we expect that still more tax cuts or
permanent tax cuts somehow will? These tax cuts have been a real turkey for
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United for A Fair Economy (www.faireconomy.org) is an independent, national
non-profit that spotlights the growing economic divide in the U.S. They can
be reached at 617-423-2148.
This work is in the public domain