The Democratic Party, led by President Obama, is making the argument that the Bush tax cuts of 2001 and 2003 caused the recession of 2008. Some campaign talking points are…“Driving us in a ditch…We’ve tried their way and it didn’t work…Tax cuts for the wealthy led to the recession…Returning to the failed policies of the past”. The tax cuts were a provable overwhelming success in terms of the resulting economy. They led to good sustainable growth, and a low unemployment rate. Are we to believe that these cuts were some sort of Trojan horse that looked great for 5 years, but snuck up and bit us in year 6? In fact the President extended them for 2 years in 2010, and is interested in extending them for 98% of Americans now. Why would he allow such a destructive policy to continue if it caused a recession? Why isn’t he asked this when he talks about the failed policies of the past?
The Bush Tax cuts had the same effect on the economy that the Reagan, Kennedy, and Harding/Coolidge tax cuts had. They created sustained economic growth and jobs. The facts are as follows…
Year GDP Growth Rate Unemployment Rate
2003 2.5% 6.0%
2004 3.9% 5.5%
2005 3.2% 5.1%
2006 2.8% 4.6%
2007 2.0% 4.6%
These statistics are readily available at government websites, and could take as long as 10 minutes to research. It is bad enough that the Democrats are trying to gain political advantage by ignoring facts. It is, however, unacceptable that people in the media would propagate this falsehood when the facts are easily available. The housing crisis caused the recession. Unqualified people were able to get mortgages for little or no money down. When the price of the house went down, the mortgage went underwater. Banks packaged these mortgages in investments, and when people started defaulting on their loans it brought the financial system to the brink of collapse. This failed policy of the past is still going on under this president. The FHA still has its 3.5% down payment mortgages going out the door.
The media and the democrats ignore these statistics so they can continue to deny the effectiveness of tax cuts, when it comes to economic growth and job creation. Acknowledging these facts would also force us to look at the real reasons for the crisis. Liberals in the press love to blame the banks for the housing crisis. They were not without blame, but they just took a bad policy and accelerated it by creating investments that bet on these bad loans. This is like blaming the driver of a car for an accident when the government mandates TNT be put in the gas tank.
The President wants to blame tax cuts for the recession when he and Democrats have not recommended any changes to the policy that was the root cause of the crisis. At the same time he has endorsed almost completely, the tax cuts that he rails about. The media has really dropped the ball in terms of pointing out the incoherence of these arguments. It is left to the Romney campaign and outside groups to get this message out, so we don’t make the mistake of leaving the dipsticks in charge in Washington.
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