The Whole Story: Bush Tax Cuts were Followed by Historically Poor Economic Performance

Bush Tax Cuts Were Followed By “The Decade With The Slowest Average Annual Growth Since World War II.” According to the New York Times, “Those tax cuts passed in 2001 amid big promises about what they would do for the economy. What followed? The decade with the slowest average annual growth since World War II. Amazingly, that statement is true even if you forget about the Great Recession and simply look at 2001-7. The competition for slowest growth is not even close, either. Growth from 2001 to 2007 averaged 2.39 percent a year (and growth from 2001 through the third quarter of 2010 averaged 1.66 percent). The decade with the second-worst showing for growth was 1971 to 1980 — the dreaded 1970s — but it still had 3.21 percent average growth.” [New York Times, 11/18/10]

  • GDP Grew Half As Much From 2001 To 2010 As From 1991 To 2000.” According to Slate, “Unfortunately, the tax cuts never translated into robust economic growth, either. Indeed, the aughts saw the worst growth since World War II. From 2001 to 2007, annual GDP growth averaged just 2.4 percent per year, lower than in any other postwar business cycle. The contrast is starker still when judging against the previous decade. In real terms, GDP grew half as much from 2001 to 2010 as from 1991 to 2000.” [Slate, 6/8/11]

Under Bush, Household Income Fell For The First Time On Record. According to Slate, “Put simply, the aughts were a decade of income stagnation: The tax cuts failed to bolster most taxpayers’ earnings, even before the recession hit. Median real wages actually dropped from 2003 to 2007. Household income from business-cycle peak to business-cycle peak declined for the first time since tracking started in 1967.” [Slate, 6/8/11]

Under Bush, African-American Job Growth Was Historically Weak. According to the Center for American Progress, “Over the course of the Bush economic cycle, African-American employment increased by only 900,000 jobs, or 11,000 jobs per month. In both absolute and percentage terms growth terms, this is the worst employment growth for African Americans over an economic cycle since the Labor Department began reporting black employment patterns in 1972. The 0.9 percent average monthly increase in African-American employment during the Bush cycle is roughly one-quarter of the 2.9 percent average monthly increase in the 1980s, and barely one-third of the average monthly increase of the 1990s.” [Center for American Progress, February 2009]

Under Bush, “Women’s Employment Growth Declined, For The First Time Since 1948.” According to the Center for American Progress, “The Bush tax cuts did nothing to promote expanded employment opportunities for women. Looking at the average monthly growth in the ratio of employed women to the female population—a measure that better accounts for the variation in women’s labor force participation since 1948—women’s employment growth declined, for the first time since 1948, during the Bush economic cycle. Over the course of the economic cycle from March 2001 to December 2007, the employment-to-population ratio for women declined at an average annualized monthly rate of -0.3 percent. In all previous post-World War II economic cycles, the employment-to-population ratio for women grew, ranging from 0.6 percent in the 1990s cycle to 1.9 percent per month in the 1970s.” [Center for American Progress, February 2009]

Under Bush, “Overall Poverty, African-American Poverty, And Child Poverty All Increased.” According to the Center for American Progress, “The Census Bureau began to track poverty statistics in 1959. Since then, the U.S. economy has experienced six business cycles, not counting the brief recovery in the double-dip recession of the early 1980s. In four of those six cycles, the number and percentage of Americans in poverty declined significantly. In contrast, during the Bush economic cycle from 2000 to 2007, overall poverty, African-American poverty, and child poverty all increased—giving the Bush cycle the worst record on poverty of any economic cycle.” [Center for American Progress, February 2009]

  • “Only One Other Economic Cycle Saw An Increase In Poverty Since The Census Bureau Began Tracking Poverty Data.” During the Bush economic cycle, the U.S. economy saw a greater percentage of its population fall into poverty than during any previous cycle on record. In 2007, 12.5 percent of the U.S. population was in poverty, up 1.2 percentage points from 11.3 percent in 2000, the previous peak of economic activity when looking at annual data. That means that an additional 5.7 million Americans were in poverty over that period. Only one other economic cycle saw an increase in poverty since the Census Bureau began tracking poverty data. That period, from 1974 to 1979, had a 2.7 million (0.5 percentage point) increase in poverty, less than half the Bush increase. Every other major cycle saw a decrease in poverty of at least 1.5 percentage points and as much as 10.3 percentage points. In contrast, during the 1990s cycle, the number of people in poverty dropped by over 2 million.” [Center for American Progress, February 2009]

Nearly 40 Percent Of Bush Tax Cuts Went To The Top 1 Percent Of Earners. According to Slate, “But the benefits mostly accrued to the rich, according to the nonpartisan Tax Policy Center. The think tank reports that between 2001 and 2008, the bottom 80 percent of filers received about 35 percent of the cuts. The top 20 percent received about 65 percent—and the top 1 percent alone claimed 38 percent.” [Slate, 6/8/11]

Bush Tax Cuts Added $2.6 Trillion To Public Debt From 2001-10. According to the Economic Policy Institute, “From 2001 through 2010, the cuts added $2.6 trillion to the public debt, nearly 50% of the total debt accrued during this period.” [EPI.org, 6/1/11]

CBPP: In 2019, “Almost Half” Of Public Debt Will Be Attributable To Bush-Era Tax Cuts And Wars. According to the Center on Budget and Policy Priorities, “Just two policies dating from the Bush Administration — tax cuts and the wars in Iraq and Afghanistan — accounted for over $500 billion of the deficit in 2009 and will account for nearly $6 trillion in deficits in 2009 through 2019 (including associated debt-service costs of $1.4 trillion). By 2019, we estimate that these two policies will account for almost half — over $8 trillion — of the $17 trillion in debt that will be owed under current policies. These impacts easily dwarf the stimulus and financial rescues, which will account for less than $2 trillion (just over 10 percent) of the debt at that time. Furthermore, unlike those temporary costs, these inherited policies do not fade away as the economy recovers.” [CBPP.org, 2/28/13]

Debt-graph-CBPP

[CBPP.org, 2/28/13; internal citations removed]