As Congress attempts to negotiate a way to cut the budget deficit and avoid a fiscal cliff, it's worth remembering that one sticking point of the negotiations was supposed to eliminate the deficit problem entirely: the Bush tax cuts. On April 27, 2001, the conservative Heritage Foundation published the above chart, forecasting the effects of then-President George W. Bush's then-proposed tax cuts — a chart that is, in retrospect, pretty hilarious. Pass the Bush tax cuts, the conservative non-profit predicted, and the future would be awesome. The tax cuts would so stimulate the economy that the government would start bringing in extra money starting in 2008. Alas, in real life, the Bush tax cuts led to huge budget deficits, and 2008 was, as you may also remember, the year of the financial crisis. Republicans continue to say they are open to raising revenue, but they want to do it without raising tax rates. "I’m willing to generate revenue," Sen. Lindsey Graham said Sunday. "It’s fair to ask my party to put revenue on the table. We’re below historic averages... I will not raise tax rates to do it." Whatever the reason for holding onto this technicality — that limiting deductions and closing loopholes is not the same thing as raising taxes — it is not based on recent evidence of what effect the Bush tax rates have on the economy.
Here's another Heritage chart from the same 2001 analysis, showing the totally crazy revenue the Bush tax cuts would bring in for the government:
They were supposed to create jobs, too:
Via the Associated Press, here's what actually happened:
Heritage predicted a lower unemployment rate if the Bush tax cuts passed: "Moreover, the unemployment rate would average just 4.7 percent instead of 4.9 percent from FY 2002 to FY 2011." Alas, despite the extension of the Bush tax cuts in 2010, the unemployment rate has remained a bit higher than predicted:
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