July 18, 2011--Bush-Obama Tax Policy

The stalemate between President Obama and Republican congressmen centers around tax policy--

Obama says that to reduce the deficit those corporations benefitting from tax breaks and individuals making $250,000 a year or more need to "pay a little more" in taxes.

Republicans counter by saying they are "job creators" and that asking them to ante up more is a "job killer."

This encapsulates a fundamental difference in ideology between the parties. But ideologies are belief systems and not based on evidence; and since we are facing a short-term as well as a long-term existential crisis that is real and not theoretical, ideologies--beliefs--are not helpful in seeking solutions.

If the argument is ultimately about jobs, in seeking the best fiscal approach to create and sustain them, it is not useful to trot out ideologies. We have nearly two decades of clear evidence about what kinds of approaches to taxation, in fact, help create jobs and which kinds do not.

Here, then, are some of these facts:

During Bill Clinton's eight years in office, the marginal tax rate for America's highest earners (the one primarily being fought about at the moment) was 39.6 percent.

During the Clinton years, 22.7 million jobs were created. 11.5 million during his first term and 11.2 during his sceond.

These tax rates were lowered to 35 percent early in George W. Bush's first term, and during those four year literally no new jobs were created. Zero. During his second term, things improved slightly--1.1 million were created.

There were other factors at work than tax policy--for example, during Clinton's terms worker productivity soared thanks to efficiencies that were the product of computing and the Internet--but 22.7 million versus 1.1 million is strong actual evidence regarding which approach to taxation is better for job-creation.

There is even more evidence.

During all of Barack Obama's two-and-a-half-years in office, Americans, in effect, continued to be taxed at the same rate as under President Bush. Actually, Obama's so-called stimulus program included more money for additional tax cuts than for direct job creation. He had to accede to this to secure the two Republican votes needed for the Senate to pass it.

And just last December, Obama caved in to Republican demands to extend the full Bush-era cuts through 2012. So we have thus far had 10 1/2 years of Bush tax policy. Though now, in fairness, it should more accurately be called Bush-Obama tax policy.

And we know about job creation thus far during the Obama years--there has been less than none. 1.8 million jobs have been lost on Obama's watch.

So, in total, Bush-Obama tax policy over more than a decade has resulted in a net loss of 700,000 jobs.

I do not understand why Obama and the Democrats do not cite this evidence while continuing to make their own empty ideological arguments to counter the Republicans. If we are talking about how to create jobs, we know a lot about what works and, equally, what doesn't from our own recent history. We need to have a real and meaningful debate about how to get out of this mess. When it comes to tax policy, we know what to do. Spouting ideology, on the other hand, may score some easy political points but is otherwise useless. Actually, worse than useless.