In June 1993, shortly after Bill Clinton became US President, the US unemployment rate was 7.0%. Under Clinton the unemployment rate dropped dramatically to 3.9% in December 2000, and the top rate of taxation had increased from 31% when he entered office to 39.6%.
In June 2001, shortly after George W Bush became US President, the US unemployment rate was 4.5% and the first of the Bush tax cuts were enacted (to create jobs). One year after the tax cuts became the law of the land, June 2002, the unemployment rate had already increased to 5.8%, and at the end of the Bush administration (and another set of income tax cuts) the unemployment rate was 2.8% higher at 7.3% together with many other problems. (BLS figures.) Unemployment might have increased because of the tax cuts, or there might be other reasons, but there does not seem to be any support for the Republican rite that tax increases suppress job creation or – the reverse – tax cuts create jobs.
Of course, if we follow the history of tax-cut promotion there are some unseemly assertions. As I said many years ago around the time of the US 2008 presidential elections:
President George W Bush was answering press questions (24 August 2001) that moved to the topic of Bush’s tax cutting package. Bush said he was proud of the congressional vote for tax cuts because he said it helped respond to adverse national economic circumstances (this was before the 11 September attack). However he warned the legislators “don’t go hog wild. I mean, appropriators appropriate. Don’t overspend. And one of my jobs as the President is to make sure we keep fiscal sanity in the budget.” A reporter pointed out that, if the package was off by just a point or two in its projected impact, the budget would be billions and billions short – to which Bush replied “Well, if I’m off by a point or two, then Congress can adjust their sights.” As should have been expected, the package was off by a point or two and Congress did not adjust their sights, with the result that deficits in both Bush’s terms greatly increased – moving from a healthy surplus on coming to office to an unhealthy deficit on leaving.
On NPR, Grover Norquist (inventor of the “no new taxes” pledge) said of one of the defectors from the pledge (Senator Lindsey Graham):
If you had a pink unicorn, how many dollars in taxes would you raise to trade for the pink unicorn? Since pink unicorns do not exist in the real world, it's never occurred to me to worry about the senator from South Carolina. He's not going to vote for a deal because the kind of 10-1 ratio deal he's talking about with real, iron-clad spending cuts is never going to happen.
The 1991 tax cuts were accompanied by an idea (from Bush and his crew) that federal regulation of businesses was was oppressive and so, to free the job creators, regulation was reduced. Sounds familiar?
For example, from Senator Olympia Snowe:
Families all across our country are enduring an extended economic downturn unlike anything we have ever seen before. Unemployment continues above nine percent, job creation is sluggish, and the housing market continues to struggle. Everywhere I go, small business owners tell me reducing the burden of unnecessarily onerous, inefficient and ineffective regulations would help them create more good-paying jobs for Americans. There is a growing consensus that regulatory reform will be a game-changer for job creators nationwide. [?! My emphasis]
Norquist and W Bush have different ideas about the abilities of members of Congress. I had also written about Norquist’s own pink unicorns:
Grover Norquist is head of a group called Americans for Tax Reform (ATR) that worked with John McCain during the 2008 presidential campaign. Not long after the election, Norquist was more inclined to incite than to show insight in a CNBC discussion about tax cuts and the US president-to-be – he said “the economy is in the present state because when the Democrats took the House and Senate in 2006 you knew those tax increases were going to come in 2010. The stock market began to collapse as soon as you recognize that those old tax rates were coming back.” (“The New Washington: Should Obama abandon his tax plan?”, CNBC: Call of the Wild, 25 November 2008). It is either the case that expectations reign supreme, because the economy and the stock market collapsed on the basis of what might happen in two years, or the case that the failure of fragile loans to fragile people produced an economic and stock market collapse. Though the economist John Maynard Keynes stressed the importance of expectations on people’s economic behaviour, he did not think they reigned supreme – nonpayment of debts, say, had more power to affect behaviour. When Norquist blamed Franklin D Roosevelt for the depression of the 1930s the rewriting of history climbed to new heights (he said FDR turned a recession into a depression because he increased taxes).
Here are the unemployment figures I extracted from the BLS site.
| Labor Force Statistics from the Current Population Survey | | | | | | | | | |||||
| Original Data Value | | | | | | | | | |||||
| | | | | | | | | | |||||
| Series Id: | LNS14000000 | | | | | | | | | ||||
| Seasonally Adjusted | | | | | | | | | |||||
| Series title: | (Seas) Unemployment Rate | | | | | | | | | ||||
| Labor force status: | Unemployment rate | | | | | | | | | ||||
| Type of data: | Percent or rate | | | | | | | | | ||||
| Age: | 16 years and over | | | | | | | | | ||||
| Years: | 1993 to 2012 | | | | | | | | | ||||
| | | | | | | | | | | | | | |
| Year | Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | Annual |
| 1993 | 7.3 | 7.1 | 7.0 | 7.1 | 7.1 | 7.0 | 6.9 | 6.8 | 6.7 | 6.8 | 6.6 | 6.5 | |
| 1994 | 6.6 | 6.6 | 6.5 | 6.4 | 6.1 | 6.1 | 6.1 | 6.0 | 5.9 | 5.8 | 5.6 | 5.5 | |
| 1995 | 5.6 | 5.4 | 5.4 | 5.8 | 5.6 | 5.6 | 5.7 | 5.7 | 5.6 | 5.5 | 5.6 | 5.6 | |
| 1996 | 5.6 | 5.5 | 5.5 | 5.6 | 5.6 | 5.3 | 5.5 | 5.1 | 5.2 | 5.2 | 5.4 | 5.4 | |
| 1997 | 5.3 | 5.2 | 5.2 | 5.1 | 4.9 | 5.0 | 4.9 | 4.8 | 4.9 | 4.7 | 4.6 | 4.7 | |
| 1998 | 4.6 | 4.6 | 4.7 | 4.3 | 4.4 | 4.5 | 4.5 | 4.5 | 4.6 | 4.5 | 4.4 | 4.4 | |
| 1999 | 4.3 | 4.4 | 4.2 | 4.3 | 4.2 | 4.3 | 4.3 | 4.2 | 4.2 | 4.1 | 4.1 | 4.0 | |
| 2000 | 4.0 | 4.1 | 4.0 | 3.8 | 4.0 | 4.0 | 4.0 | 4.1 | 3.9 | 3.9 | 3.9 | 3.9 | |
| 2001 | 4.2 | 4.2 | 4.3 | 4.4 | 4.3 | 4.5 | 4.6 | 4.9 | 5.0 | 5.3 | 5.5 | 5.7 | |
| 2002 | 5.7 | 5.7 | 5.7 | 5.9 | 5.8 | 5.8 | 5.8 | 5.7 | 5.7 | 5.7 | 5.9 | 6.0 | |
| 2003 | 5.8 | 5.9 | 5.9 | 6.0 | 6.1 | 6.3 | 6.2 | 6.1 | 6.1 | 6.0 | 5.8 | 5.7 | |
| 2004 | 5.7 | 5.6 | 5.8 | 5.6 | 5.6 | 5.6 | 5.5 | 5.4 | 5.4 | 5.5 | 5.4 | 5.4 | |
| 2005 | 5.3 | 5.4 | 5.2 | 5.2 | 5.1 | 5.0 | 5.0 | 4.9 | 5.0 | 5.0 | 5.0 | 4.9 | |
| 2006 | 4.7 | 4.8 | 4.7 | 4.7 | 4.6 | 4.6 | 4.7 | 4.7 | 4.5 | 4.4 | 4.5 | 4.4 | |
| 2007 | 4.6 | 4.5 | 4.4 | 4.5 | 4.4 | 4.6 | 4.7 | 4.6 | 4.7 | 4.7 | 4.7 | 5.0 | |
| 2008 | 5.0 | 4.9 | 5.1 | 5.0 | 5.4 | 5.6 | 5.8 | 6.1 | 6.1 | 6.5 | 6.8 | 7.3 | |
| 2009 | 7.8 | 8.3 | 8.7 | 8.9 | 9.4 | 9.5 | 9.5 | 9.6 | 9.8 | 10.0 | 9.9 | 9.9 | |
| 2010 | 9.7 | 9.8 | 9.8 | 9.9 | 9.6 | 9.4 | 9.5 | 9.6 | 9.5 | 9.5 | 9.8 | 9.4 | |
| 2011 | 9.1 | 9.0 | 8.9 | 9.0 | 9.0 | 9.1 | 9.1 | 9.1 | 9.0 | 8.9 | 8.7 | 8.5 | |
| 2012 | 8.3 | 8.3 | 8.2 | 8.1 | 8.2 | 8.2 | 8.3 | 8.1 | 7.8 | 7.9 | | | |
No comments:
Post a Comment