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Los Angeles, California, United States
The blog 'Breaking Bread' is for a civil general discussion, like you might have at the dinner table with guests. The posts 'Economics Without the B.S.' are intended for a general audience that wouldn't have to know the difference between a Phillips Curve, a Laffer Curve, or a Cole Hamels Curve. Vic Volpe was formally educated at Penn State and the University of Scranton, with major studies in History, Economics and Finance, and Business; and, is self-educated since by way of books and on-line university courses. His practical education came from fifty years of work experience in the blue-collar trades as well as a white-collar professional career -- a white-collar professional career in production and R&D. In his professional career and as a long-haul trucker, he has traveled throughout the lower forty-eight. From his professional career alone he has visited many manufacturing plants in the United States, Europe and China. He has lived in major metropolitan areas and very small towns in various parts of the United States. He served three years with the U.S. Army as an enlisted man, much of that time in Germany.

Monday, December 31, 2012

The Bush Tax Cuts

Economics Without The B.S.**:

[**  Double entendre intended.]

How soon we forget.  Where did the Bush tax cuts come from and who did they go to?

Do you remember the tax give-aways in 2001 by the Bush Administration?  They were being handed out from our supposed budget surplus.  In the year 2001 the tax reductions totaled over $1 trillion (over an eleven year period from 2001 to 2011)and came not from a surplus in the operational budget (which was in deficit) but from the surpluses in the Social Security contributions.  And who got most of that tax give-away from the Social Security contributions?  People with incomes over $100,000 – incomes over $90,000 are not subject to the Social Security Withholding Tax.  And if you can excuse my impertinence I might remind you that the younger generation, with professtations for an Ownership Society, was in that same line with the elders, awaiting their share of the entitlement handouts.
My! My! And now we want to balance the budget by cutting Social Security?

Sources of information:

1.The actual figure cited is $1.35 trillion.  Transcript of news release from PBS News Hour, ‘President Bush Signs Tax Cut’, June 7, 2001.  www.pbs.org/newshour/updates/june01/tax_6-7.html.

2.  I have only cited a couple of sources here; but, at the time this was widely mentioned in the print press and radio and television broadcasts.  You should note in reading (or listening) to the Bush Administration advocates spinning the positives of the tax cut that these conversations took place just before the tragic events of 9-11, where upon followed a modest recession that decreased government revenues and a military build-up which increased government spending resulting in operational budget deficits which we have not seen the end of yet.

a.  Transcript from PBS News Hour, ‘Shrinking Surplus’, August 21, 2001.  www.pbs.org/newshour/bb/economy/july-dec01/surplus_8-21.html.  In this conversation Rep. John Spratt, the senior Democrat on the House Budget Committee, mentions the operational budget surpluses/deficits and the effect of Social Security surpluses in the trust fund.

b.  Transcript from PBS News Hour, ‘Dwindling Dollars’, August 28, 2001.  www.pbs.org/newshour/bb/budget/july-dec01/dollars_8-28.html.  In this conversation Alice Rivlin, former Director of the Congressional Budget Office and former member of the Federal Reserve Board, also mentions the surpluses in the Social Security trust fund.

3.  I have cited several sources here because this point gets obfuscated in the discussion between Bush Administration advocates of the tax cut and critics of the tax cut.  The advocates will discuss the tax rebates handed out during 2001 as being distributed primarily to lower income people while the critics will point to this amount being only a small portion of the $1.35 trillion to be distributed over the eleven year period as a result of tax bracket reductions and other tax reforms like the repeal of the inheritance tax and corporate tax breaks distributed to individuals (e.g., dividends, etc.), and other items.  A good look at the sources will reveal that incomes over $147,000 (the top five percent of income groups) will get over 47 percent of the $1.35 trillion.  During the first Gore-Bush Debate in 2000, then candidate Bush wanted to pass the surplus in the budget back to the people saying, “…why don’t we pass $1.3 trillion of that back to the people who pay the bills? …I think it’s the hard-working people of America’s money…”  By the year 2000 (under President Clinton) we were just starting to slip into an economic slow-down and revenues were falling off to put the operational federal budget in deficit, but the Social Security surpluses in the trust fund made the unified budget look like a surplus.

a.  Refer to:  Transcript from PBS News Hour, ‘Booster Shot?’, July 27, 2001.  www.pbs.org/newshour/bb/economy/july-dec01/booster_7-27.html.  See comments by Eileen Appelbaum, research director of the Economic Policy Institute.

b.  Transcript from PBS News Hour, ‘Feeling The Tax Cut’, May 28, 2001.  www.pbs.org/newshour/bb/economy/jan-june01/taxcutfx_05-28.html.  See comments by Senator Kent Conrad, “The top 20% get 71% of the benefits.” 

c.Policy Brief # 101-2002, ‘The Bush Tax Cut: One Year Later’, by William G. Gale and Samara R. Potter, The Brookings Institution, 2002. [see chart page 2] 

d.  Debate Transcript ‘The First Gore-Bush Presidential Debate’, Commission On Presidential Debates, October 3, 2000. 

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