This can’t be said enough. The top 2 percent of income earners benefited overwhelmingly from the Bush tax cuts, which you should remind yourself every day, were WRITTEN BY REPUBLICANS, TO EXPIRE at the end of this year. Now that John Boehner has grabbed a full day’s headlines with a bait and switch call for President Obama to fire his economic team, which was really just a ruse to get oxygen for the resuscitated corpse that is the GOP tax cuts and corporate welfare economic plan, it might be a good time to review “the math,” as Karl Rove might say. The chart below was produced by the Center on Budget and Policy Priorities. It shows who benefited most from the Bush tax cuts of 2003 and 2004, in terms of the average benefit families in various income groups would receive next year if the tax cuts were to be extended:
As you can see, the Bush tax cuts were a pretty sweet deal for the richest Americans, but not so much for average families. An explanation, from the Joint Committee on Taxation:
And what about the impact of extending the Bush tax cuts on the deficit? For that, we turn to the nonpartisan Congressional Budget Office:
The Obama administration and Democratic leaders in Congress are seeking to extend tax cuts for Americans earning less than $250,000 a year, while letting expire some of those for wealthier individuals. Democrats say this would help stimulate the economy and cost the government less than if all cuts were extended.
The CBO’s baseline scenario assumes that the Bush-era tax breaks will expire, as current law provides. In that case, next year’s deficit would fall to $1.07 trillion, or 7 percent of the country’s total economic output, or gross domestic product, according to agency estimates. By 2012, the deficit would shrink to $665 billion, or 4.2 percent of GDP.
Agency analysts also projected that public debt would rise from 53 percent of GDP last year to almost 70 percent of GDP by 2020, a figure unmatched since the 1950s.
“It is an extraordinarily high level of debt by the experience of this country over the past 65 years,” Elmendorf said. “Of course, it is also an extraordinarily difficult economic situation in which we find ourselves.”
Extending the Bush tax cuts would punch a $680 billion hole in the budget deficit, just so the federal government can, as Paul Krugman put it, “cut checks averaging $3 million each to the richest 120,000 people in the country.” And since I’m quoting him, I’ll let Krugman close it out:
How can this kind of giveaway be justified at a time when politicians claim to care about budget deficits? Well, history is repeating itself. The original campaign for the Bush tax cuts relied on deception and dishonesty. In fact, my first suspicions that we were being misled into invading Iraq were based on the resemblance between the campaign for war and the campaign for tax cuts the previous year. And sure enough, that same trademark deception and dishonesty is being deployed on behalf of tax cuts for the wealthiest Americans.
So, for example, we’re told that it’s all about helping small business; but only a tiny fraction of small-business owners would receive any tax break at all. And how many small-business owners do you know making several million a year?
Or we’re told that it’s about helping the economy recover. But it’s hard to think of a less cost-effective way to help the economy than giving money to people who already have plenty, and aren’t likely to spend a windfall.
No, this has nothing to do with sound economic policy. Instead, as I said, it’s about a dysfunctional and corrupt political culture, in which Congress won’t take action to revive the economy, pleads poverty when it comes to protecting the jobs of schoolteachers and firefighters, but declares cost no object when it comes to sparing the already wealthy even the slightest financial inconvenience.