We are in an election cycle, albeit a l – o- n- g election cycle. We have heard, and can be expected to hear a lot of chatter from those who seek to gain notice by endorsing tax cuts and it’s permanent effect on the economy and our lives.

So is there truth to this theory that giving up tax breaks to the rich, actually creates revenue for the country?

As was pointed out in Delaware Liberal, it depends on where one draws the line. One of the tricks of the trade in corporate America is to take over a business, run it really badly the first year, blame the previous owners, and then as your year catches up to when you took over, and you start compare your performance against those poor numbers, you are able to publish a rosy picture: ” after a rough start, I am please to announce that we show strong signs of growth over last year……” No one ever raises their hand and says, “but last year sucked.”

This increase of revenue draws its baseline in 2003. The level of revenue is just barely getting to the point it was during the Clinton years. Let me repeat that for the hard of hearing. The level of revenue is just barely getting to the point it was during the Clinton years…..

Here is fact 1:

Revenue growth over the current business cycle has been lower than in comparable past periods; in fact, revenue growth over the current business cycle is near zero after adjusting for inflation and population growth.

This translates to the meaning that citizens are not doing any better than they were during the Clinton years. The revenue increase occurred because there are more people paying in. In other words, if you have 3 people paying 4$ per person you get 12$ of revenue. Now if the economy sucks, and you lose enough income so you only pay 2$ per person, but there are double the number of contributors, (6 X 2$ =12$) is also earned, and the administration crows how great they do, while you poor sod, are making 1/2 of what you once did under a Democratic economy.

So do tax cuts work?

Moreover, even with higher-than-anticipated revenues this year, revenues in 2006 remain about $300 billion below the levels OMB and CBO projected for this year in early 2001, and about $100 billion below those levels adjusted for the cost of the tax cuts enacted since that time.

Loosely translated, had Gore won, we could have spent an additional 300 billion on our infrastructure by now, that we could not have spent. Oops, did I say spend? I meant to say received….for despite the 300 billion less income pouring into the treasury, Mike Castle’s cronies, the entire Republican leadership, spent more per year on expenditures than the Clinton administration ever did, during any of it’s 8 good economic years it had while it was in office.

Revenue “surprises” are relatively common. Unanticipated revenue gains occurred in nearly every year of the 1990s expansion. Those revenue “surprises” followed tax increases rather than tax cuts.

Translated, it means the same thing would have happened without the tax cuts, and would have done so without mortgaging our children’s future to pay off our creditors today.

Moreover, there were negative revenue “surprises” in each year from 2001 through 2003, with end-of-year revenues well below the levels OMB had projected earlier in the year, even after adjusting for the cost of enacted tax cuts. When tax cut supporters take recent positive revenue “surprises” as evidence that tax cuts are “paying for themselves,” they ignore these other facts.

Can’t say it any clearer than that. Unless it is with this:

There is strong evidence that increased income disparities between high-income households and the rest of the population have contributed to the recent revenue gains.

In other words, taking money away from the lower middle classes which pay an average 10% rate and giving it to the super wealthy, which are paying a 35 % rate, the government will get more money back from every dollar earned……….. It does little to help those who are losing jobs to corporations who move their locations overseas. Wait a second, if people are doing poorly, where is the revenue coming from?

Much of the unanticipated revenue increase comes from strong growth in corporate revenues, which reflects exceptionally strong growth of corporate profits during the current business cycle.

Wages and salaries are flat.

Corporate profits are higher than anytime past WWII. It is this Super rich income stream that has pushed revenue higher. These high profits flow primarily from the 03 roll back of the capital gains tax. In other words, money that used to go to the treasury (300 billion), is now going into corporations, and they continue to hold costs in line by robbing pension plans and suppressing wages at the levels of flat growth.

Even with higher-than-anticipated revenues this year, budget deficits remain disturbingly large for a mature economic recovery

What that means is …….in street language…………we’re screwed. Basically as a nation we have just wasted 8 years. So the next time a super wealthy conservative tells you are doing better now because he is making more money, shove this graph in his face. Then do something about it. Vote a Republican out of office.

The Real Bush Legacy