Blog: Blast from the Past: The Reality of Tax Breaks
Oct 24, 2011
As those in Congress continue to debate solutions to stabilize our economy, we must be cognizant and reflective about past policies that have failed the American people. After all, those who forget history are doomed to repeat it. One of the solutions on the table is to cut taxes for the super-rich in order to spur job creation.
Our government is cutting essential services utilized by the people to put themselves back on their feet and lead a healthy, stable life. We should be providing for those who have too little. Yet our nation is putting more in the pockets of those who have more than enough. This idea goes against our core American, and Catholic, values.
We know that tax cuts have done little to help the middle class and the most vulnerable in our society. But that wasn’t what we were hearing in 2001 when the Heritage Foundation was supporting the first round of tax cuts. According to the conservative think tank’s 2001 “The Economic Impact of President Bush’s Tax Relief Plan” report:
- They said President Bush’s tax plan would boost economic activity and over 1.6 million would be working at the end of FY 2011.
What really happened? In 2001, 6.8 million Americans, at a rate of 4.7%, were unemployed. Currently, there are 14 million Americans unemployed at a rate of 9.1% according to the U.S. Bureau of Labor Statistics. The numbers are clear – 1.6 million jobs were not created.
- They said the plan would reduce excess tax revenue and effectively pay off the publicly held federal debt by FY 2010.
What really happened? Our public debt now exceeds $14 trillion, and the Bush tax cuts of 2001 and 2003 account for 13% of it. By 2019, the tax cuts are projected to account for 50% of our debt according to the Center on Budget and Policy Priorities the tax cuts are projected to account for 50% of our debt according to the Center on Budget and Policy Priorities.
- They said $568 billion in new revenue would be created.
What really happened? The Congressional Budget Office expects revenue to be just 14.8 percent of G.D.P. this year. Revenue has averaged 18 percent of G.D.P. since 1970 and a little more than that in the postwar era.
While we experienced events like the Sept. 11 attacks and the 2008 financial meltdown that had a devastating effect, the Bush tax cuts certainly did not relieve the resulting economic downturn. For the sake of maintaining our social safety net programs like SNAP that deliver critical aid so that those in poverty can feed themselves, we must let the flawed Bush-era tax cuts expire next year.