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Author Topic: Proof that Bush's economic policies aren't helping those who need it most
Sancselfieme
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The number of Americans living in poverty increased by 1.3 million people to 35.8 million in 2003, according the U.S. Census. It is the third straight year that poverty levels have increased.
http://ferret.bls.census.gov/macro/032004/pov/toc.htm

Do you think that this, along with the net job loss and the scant, mediocre, McDonald's-style jobs that *are* being created will hurt Bush's chances for re-election?

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Daruma28
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Bush fails to get deserved credit for tax cut benefits

Despite reporting distortions, a congressional report shows the rich pay proportionately more in taxes while all income earners do better

By Donald Luskin

Chart Showing Effects of Tax Cuts

A report from the nonpartisan Congressional Budget Office has Democratic presidential candidate John Kerry claiming it proves that “Over the last four years, the burden of taxes has shifted from the wealthy to the middle class.”

Those are politically motivated lies that distort the findings of the report. Here’s the truth.

The report proves that what President Bush said about his tax cuts is true: “Tax relief is for everyone who pays income taxes.”

It’s true for the rich, and it’s true for the not-so-rich. Across 109.4 million tax-paying households — from the wealthiest 1 percent with incomes averaging over $1 million to the lowest-earning 20 percent of people with incomes averaging $14,900 — the report shows that all income classes have seen their income tax rates lowered thanks to Bush’s cuts in 2001, 2002 and 2003.

The CBO report shows how 2004 income tax rates have dropped for everyone compared with tax laws in force in 2000.

The report also shows that Bush’s tax cuts have been “progressive” — that is, they have shifted the share of the overall federal income tax burden toward the wealthy and away from lower-income earners. Without the Bush tax cuts, the highest-earning 20 percent of households this year would have paid 78.4 percent of all federal income taxes. Now, after the Bush tax cutes, their share of the burden has risen to 82.1 percent. Every other group now pays a smaller share of the total income tax burden.

Another part of the CBO report shows how the income tax burden has shifted upward for the rich and downward for everyone else.

What a victory for compassionate conservatism. Everybody gets an income tax cut, and when it’s all done the rich end up paying proportionately more.

The report also shows that Bush managed to craft a tax reduction package that even benefits the lowest-earning taxpayers who already pay what amount to negative income taxes. That’s right, thanks to various refundable tax credits, before the Bush tax cuts the lowest-earning 20 percent of income earners not only paid no income taxes — on average they received money from the Internal Revenue Service. Now that’s compassionate.

But will Kerry or the media give Bush one ounce of credit for any of that? No, the liberal establishment always has to find a way to demonize anything that comes from the policies of Bush.

Virtually parroting the first paragraph of a Democratic congressional press release, the Wall Street Journal story began: “President Bush’s three tax-cut laws will reduce this year’s income taxes for the richest 1 percent of taxpayers by an average of $78,460, more than 70 times the average benefit for the middle 20 percent of taxpayers, congressional analysts found.”

First, the Journal gives the false impression that the statistics cited in the first paragraph are from the CBO report. They are not. They appear nowhere in that report. Instead, they are from a separate analysis of the CBO report by the Democratic members of the Joint Economic Committee of Congress.

Second, the Journal’s version of the Democrats’ analysis inserts a critical — and erroneous — word that was deliberately not used by the Democrats. The Journal refers to income taxes — when the Democrats just refer to taxes.

It’s an important distinction, because the 2002 tax cuts allowed for greater deductibility of capital expenses for corporations — a deliberate (and successful) attempt to stimulate corporate capital investment after the terrorist attacks of Sept. 11, 2001. The CBO attributes those corporate tax cuts to individuals, based on the extent to which individuals receive dividends and capital gains.

Naturally, the highest-income earning taxpayers will get the bulk of this — even though all taxpayers enjoy the many benefits of a stronger economy as a result of greater capital investment by corporations.

If that corporate tax cut and the CBO’s quirky methodology for attributing it to individuals it is eliminated from the analysis, then the 70-1 advantage of the top 1 percent versus the middle 20 percent is almost cut in half. Yes, the Democrats surely used data selectively to make their claims as extreme as possible — that’s their partisan job. But the supposedly objective Journal made the data seem even more extreme than the Democrats did.

Third, the Journal eliminated a critical word from the Democrats’ press release — “2004.” The corporate provisions of the 2002 tax cut expire after 2004, so the extreme numbers focused on by the Democrats settle down considerably in 2005 and thereafter.

Robert Williams, the economist who is the chief author of the Congressional Budget Office’s report, told me he was disappointed with the way his work has been distorted.

You would think seasoned congressional staff members would know by now how Washington works in an election year. But apparently even they have never seen presidential candidates and the media as rabidly partisan as they are right now.

[ August 30, 2004, 06:10 PM: Message edited by: Daruma28 ]

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maniacal_engineer
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except that on a percentage basis it is basically the same as 4 years ago. Unemployemnt is the same as when Clinton was seeking re-election in '96.

46% of americans below poverty level own their homes, and something like 80% don't last more than 5 years in poverty. (stats cited from memory - heard 'em on Medved)

I think bush has done pretty well considering he inherited a recession from Clinton, Then had to clean up all of the corporate corruption that happened under...Clinton, and then had a terrorist attack in which islamofacists emboldened by a lack of meaningful response under... whats his name... blew up the WTC and damaged the economy. Another remembered stat - this recession had a lower poverty increase - about half - compared to the last couple of recent recessions.

I think GWB has done a good job economically considering the hand he was dealt. Whether he gets credit for it or not is another story.

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Adam Masterman
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Though I am not an economist (art teacher [Wink] ), I have a couple of issues with the Luskin piece:

quote:
The report also shows that Bush’s tax cuts have been “progressive” — that is, they have shifted the share of the overall federal income tax burden toward the wealthy and away from lower-income earners.
Actually, alot of the burden has been shifted to deficit spending. Since deficit spending isn't yet paid for, you cannot yet say where the burden will ultimately fall.

quote:
the 2002 tax cuts allowed for greater deductibility of capital expenses for corporations — a deliberate (and successful) attempt to stimulate corporate capital investment after the terrorist attacks of Sept. 11, 2001. The CBO attributes those corporate tax cuts to individuals, based on the extent to which individuals receive dividends and capital gains.

Naturally, the highest-income earning taxpayers will get the bulk of this — even though all taxpayers enjoy the many benefits of a stronger economy as a result of greater capital investment by corporations.


This is just an awful justification for not looking at this statistic, basically requiring us to accept supply-side economics as gospel. Despite the fact that I am "reaping the rewards of a more robust economy," these people are still getting a tax break on their income and it should be considered in any statistical analysis. Remember, its income tax, not salary tax. Dividends and capital gains ARE income, and they are one of the major ways rich people make their money (at least in the corporate world). They should be counted, and the 70 to 1 ratio is perfectly valid.

These two points seemed the major thrust of the article, and I found them both suspect.
Adam

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Adam Masterman
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and, of course, there still is the unaddressed question of why poverty is spiking if Bush's economic policies are so sound.
Adam

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Everard
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"except that on a percentage basis it is basically the same as 4 years ago. Unemployemnt is the same as when Clinton was seeking re-election in '96"

Yeah, but at that time, income was higher then it is now. The unemployment percentage is the same... but more people have been unemployed longer, and there are fewer opportunities for people to get jobs, and people who are employed are working fewer hours for less money then they were 4 years ago.

As discussed in other threads, the unemployment numbers aren't really very indicitive of how people at the bottom end are doing. 8 years ago, many of the unemployed were people moving between 50k plus jobs. There aren't very many of those people now. Unemployment, now, isn't as fluid as it was 8 years ago, and thats a large problem.

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Daruma28
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That depends on the definition of "poverty."

From what I've read elsewhere, the report is based strictly on yearly income reporting...so say Teddy Kennedy lost his next bid for re-election and spent a year at the family compound drinking away his sorrow, making no income whatsover. That would make him suddenly a new member of the "poverty" class.

When the government measures poverty they're only concerned with paychecks, not with what you have already earned. The government doesn't look at your bank accounts, your balance sheets or that jewelry hanging around your neck. Only your paychecks.

Let's say you are a remarkably successful stock broker. You decide to take a year off and travel the country in your $800,000 Blue Bird Wanderlodge motor home. Guess what? For that year, our government says you're "living in poverty."

Why is it so? It started back during the LBJ "Great Society" years. Johnson wanted to create a method of measuring poverty that would provide a continued excuse for expanding the scope and nature of Johnson's war on poverty programs. That method of measuring poverty -- by only counting income -- is still alive today, and it is still being used by government hacks as a reason for ever more government and ever more government spending.

The average American defined as "poor" by the federal government enjoys a higher standard of living than the average European; not the average poor European ... the average European. It's a scam. A scam to enable more government. If a person has a roof over their head, food in their cupboard, a television set, a washer and dryer, a microwave, air conditioning and a car, while reciving food stamps, section 8 housing subsidies and a monthly welfare check, they are considered in "poverty." Just more leftist fantasies and imagined "emergencies" designed to create the need for more government. With very rare exception, there is not a single person living in so-called "poverty" in America whose own decisions have not led to their situation.

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tshaw
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I'd like to insert part of an article by Rich Tucker that I just read at townhall.com

------------------------------------------------
" The Heritage Foundation has done plenty of research on this, and good news abounds. For example, the July unemployment rate of 5.5 percent is far better than the 6.3 percent reported last July. And it even beats the average of 5.8 percent unemployment in the go-go 1990s. Plus, unemployment is dropping as our population is growing. We’ve now got more Americans working than ever before. More good news.

Also, there seems to be a big problem with the payroll survey used to generate the jobs data. That problem should be obvious from the numbers the Labor Department put out there. If in fact we generated “only” 32,000 jobs, how did the unemployment rate drop .1 percent? There are 139.7 million people in the workforce. To bring the unemployment rate down by .1 percent, we’d need to create 139,700 jobs, not 32,000. So how did that happen? I’ve yet to hear any journalist ask that question.

At the same time, the number of long-term unemployed dropped in July by 100,000. Now, where did these people go? The establishment answer seems to be “well, they stopped looking for work.” Did they?

Imagine yourself out of a job. Would you ever “stop looking for work?” Of course not. Where would you live? What would you eat? The very idea of “discouraged workers” is silly. But again, journalists seem immune to this idiocy, or they’d be asking where these unemployed folks went.

Heritage has a possible answer to where the unemployed have gone: back to work. As measured by the government’s household survey, employment rose by 629,000 over the month of July. Good news indeed. However, to get there, you have to look behind the government’s widely touted numbers and determine where they came from and why. Few journalists seem interested in doing that.

But one well-known person seems to have. Last month, Federal Reserve Chairman Alan Greenspan hinted to lawmakers that the economy is steadily improving. The Fed later showed its confidence by raising interest rates. That’s bad news for borrowers, but says something good about the overall economy. After all, the Fed wouldn’t raise rates unless it thought the economy was going to generate plenty of jobs in the coming months.

Of course, all predictions are subject to change. I’ve accused journalists of ignoring good economic news. But maybe that’s going to change. Maybe we’re about to see a rash of front-page stories about the 1.81 million jobs the payroll survey shows our economy has created since March 2001."
-----------------------------------------------
The whole article can be read at:
townhall.com

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bearcatmark
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ALso you talk of the Clinton unemployment rate in 1996, but fail to realize that we were in the process of getting people to work who were unemployeed under Reagan, and Bush. Things were getting better. Unemployment decreased throughout Clinton's term. And finished at about 5.3% if I remember correctly.... There were better paying jobs, and less people in poverty.
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Daruma28
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That was called the "dot com" bubble bearcatmark. Millions of jobs created for thousands of companies that floated on irrational exuberance of investors gone haywire, dumping money into any company with the name ".com" after it.

When the bubble burst, all those companies went bye bye.

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Everard
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The payroll survey's have been debated in many places on ornery. Do a search. SOme interesting stuff floating around.

That said, claiming that poor americans have a higher standard of living then the average european is dependant upon which countries we include in "european." Higher standard of living then the average dane, german, norsk, or frecnhman? No. Higher standard of living then the average serbian, bulgarian, or romanian? yes.

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maniacal_engineer
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the stat I heard was that if the EU were a state it would be above only mississippi, West Virginia, and Arkansas in terms of (here I am a little fuzzy) either per capita GDP or income. There are some countries that do better than the US (luxemborg) but not many. The poor in america have more floor space per person, are more likely to own cars, have a TV, get satellite, and own a computer.
I don't want to belittle poverty, but in america the poor people really are fat, unheard of in the scope of human history.

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Everard
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Remember that per capita income doesn't say much about purchasing power.
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maniacal_engineer
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fair enough, but wouldn't that favor the US as well since we have lower marginal tax rates and MUCH lower taxes on fuel/energy?
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Adam Masterman
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quote:
fair enough, but wouldn't that favor the US as well since we have lower marginal tax rates and MUCH lower taxes on fuel/energy?
You mean, are things cheaper here? Well, personal experience has shown me the opposite, at least in Japan, Thailand, China, India, Germany, Switzerland, and Spain. Anyone got stats on this? Ev?
Adam

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Adam Masterman
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Man, that Luskin guy is a jerk! His comments about the Bush tax cuts being "progressive" have been bothering me for a few days, so I finally did a little research. Lo and behold, every objective source I could find comes to the same conclusion: tax cuts shift the burden DOWN:

http://releases.usnewswire.com/GetRelease.asp?id=34703

http://www.washingtonpost.com/wp-dyn/articles/A61178-2004Aug12.html

http://money.cnn.com/2004/08/13/news/economy/election_taxes.reut/

http://query.nytimes.com/gst/abstract.html?res=F50913F73C5B0C708DDDA10894DC404482

Whats more, many of his statements were flatly contradicted in the news stories. For example:

quote:
Without the Bush tax cuts, the highest-earning 20 percent of households this year would have paid 78.4 percent of all federal income taxes. Now, after the Bush tax cutes, their share of the burden has risen to 82.1 percent.
contrast that with what the Post writes:
quote:
the wealthiest 20 percent, whose incomes averaged $182,700 in 2001, saw their share of federal taxes drop from 64.4 percent of total tax payments in 2001 to 63.5 percent this year." (Washington Post, "Tax Burden Shifts to the Middle," 8/13/04)

Where is he getting his numbers? How come the Post is claiming 63.5, and he's saying 82.1? Do people go to hell for things like this? [Mad]

Adam (hoppin' mad)

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Jesse
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Not only that, but...you can't throw out the "share" of the total tax burden paid by the rich without out referencing the total share of income they made in the same year.

"The report also shows that Bush managed to craft a tax reduction package that even benefits the lowest-earning taxpayers who already pay what amount to negative income taxes. That’s right, thanks to various refundable tax credits, before the Bush tax cuts the lowest-earning 20 percent of income earners not only paid no income taxes — on average they received money from the Internal Revenue Service. Now that’s compassionate."

On average? Maybe. But in response to the "the poor don't pay taxes" myth, lets give it a test.

Those with children are getting hand outs in the form of the EIC. Lets look at the taxes paid by a single 20 year old making 14,000 a year, on their 2003 income.

It's pretty simple, 14,000 minus a 7,800 standard deduction. Thats it if our imaginary person has been a responsible young adult and refrained from producing off-spring they can't support.

So, we head to the tax table and..they owe 616 dollars.

http://www.irs.gov/pub/irs-pdf/i1040ez.pdf

http://www.irs.gov/pub/irs-pdf/f1040ez.pdf

Have fun, do the math yourself, and feel the envy for the "lucky duckies".

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towellman
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Didn't you answer the question you raise below in an earlier post?

quote:
Without the Bush tax cuts, the highest-earning 20 percent of households this year would have paid 78.4 percent of all federal INCOME, INCOME,INCOME,INCOME taxes. Now, after the Bush tax cutes, their share of the burden has risen to 82.1 percent.

contrast that with what the Post writes:

quote: the wealthiest 20 percent, whose incomes averaged $182,700 in 2001, saw their share of federal taxes drop from 64.4 percent of TOTAL,TOTAL,TOTAL,TOTAL,TOTAL,TOTAL tax payments in 2001 to 63.5 percent this year." )

Where is he getting his numbers? How come the Post is claiming 63.5, and he's saying 82.1? Do people go to hell for things like this?

(bold and numerous repeats added point out how both accounts could be true)
fyi, a common question on the LSAT test requires the ability to resolve the apparant discrepancy in two statements, pretty obvious here. Another significant word difference is "highest-earning" vs. "wealthiest." One is income, the other is net worth and probably misused in this case since it would be really hard to get good stats on that.

quote:
"fair enough, but wouldn't that favor the US as well since we have lower marginal tax rates and MUCH lower taxes on fuel/energy?"

" You mean, are things cheaper here? Well, personal experience has shown me the opposite, at least in Japan, Thailand, China, India, Germany, Switzerland, and Spain. Anyone got stats on this?"

From one source, The Economist Purchasing Power Parity Big Mac Index Switzerland-69% more expensive. Euro area-13% more expensive. All others cheaper.

Gas Prices in cents per litre (2002)
US-40, Japan 91, Germany 103, Spain 83, Thailand 36, China 42, Switzerland 89.
Source: http://www.zietlow.com/docs/Fuel-Prices-2003.pdf pg 59

So, not sure when you were visiting these places, but Europe has been more expensive than the US for a long time, especially when it comes to gas prices (mostly tax difference though). I'd readily agree to the glorious shopping for Americans available in Thailand and China. Haven't tried India yet, and I honestly thought that Japan would be more expensive...maybe just their food is more.

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