Lost

February 18, 2009 at 11:12 pm | Posted in American politics | Leave a comment

There is no better word to describe the result of Bush’s 2001 tax cut in light of what happened in 2008 (and what will continue to happen as the economy slides away further). Anonymous Liberal says it best in his post putting Obama’s stimulus in perspective. He notes that Bush’s 2001 tax cut was for 1.35 trillion dollars, almost double the size of Obama’s stimulus package. That’s quite the cost to the government. And, where did that money go?

The Bush tax cuts were skewed dramatically toward the wealthy. In 2004, 60% of the tax cuts went to the top 20 percent of income earners with over 25% going to the top 1% of income earners. Those numbers have increased since then as the cuts to the estate tax have taken effect.

And where did that money go? Well, when already wealthy people get additional income, they generally invest it as opposed to spending it (which is why upper income tax cuts are generally ineffective as stimulus). The majority of this money likely went into the stock market or into various kinds of hedge funds. And with the worldwide crash in equities over the last five months, much of that money has now evaporated. It’s just gone. Indeed, the tax cuts — by flooding the investment sector with additional capital — likely contributed to the very frenzy of risk-taking that led us to where we are today.

It’s just gone. Lost. It no longer exists. It used to. But then the rich, who were given this money by George W. Bush, gambled it and lost it. It’s gone.

And the most tragic part about it is that we have virtually nothing to show for all that spending. No bridges. No infrastructure. No college degrees. No reduction in the national debt. Nothing.

Indeed. What we get out of it is more debt and economic collapse.

I’ve been convinced for a long time now that historians will look back on the early part of the Bush administration as the biggest missed opportunity in modern American history. An unexpected economic boom in the 1990s put us in a position to finally put our national fiscal house in order. We could have paid back much of our debt and taken steps to shore up our future liabilities. But instead of we took a bunch of money and lit it on fire, and now we are in worse fiscal shape that we have ever been in as a nation, and there’s no light at the end of the tunnel. Thank you, President Bush.

I was convinced of this in 2000 when Bush was out campaigning on electing him for his tax cut. He was promising he would give tax cuts to the rich in 2000. I knew it was a big mistake then. That money is lost.

When historians judge George W. Bush, they will have very little to say positive about him. Very very little. Maybe his aid to Africa. In terms of foreign policy, we have a negative return. In terms of domestic challenges, we have a negative return. In terms of economic challenges, there can’t be a starker difference between what his predecessor left him and what he left Obama. He came into office with a budget surplus and a fairly healthy economy. He has given Obama a crumbling economy. Even when things start righting themselves… say Iraq becomes a nice place. Say al-Qaida surrenders. Say the economy turns around. Even when these things happen, historians will rip George W. Bush up for wasting an opportunity like no other to fix our national financial situation when he had such an opportunity that few presidents ever have. Instead of paying off debt, reducing government spending, and THEN giving money back to the citizens, George W. Bush enriched the rich who gambled the money given to them by their government, and lost it.

The irresponsibility…

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