Fareed Zakaria Uses Fuzzy Math and Revisionist History to Bash Bush Tax Cuts
As a small number of so-called "moderate Democrats" voice opposition to raising taxes in the middle of a weak economic recovery, a movement is surfacing in the liberal media to shout them down and force the expiration of the Bush tax cuts.
One such voice is Fareed Zakaria who used the Sunday CNN program bearing his name as well as a Washington Post op-ed Monday to make his dishonest case.
Unfortunately for viewers and readers, Zakaria employed kindergarten-level arithmetic along with shameful revisionist history to propagandize those foolish enough to pay attention to him.
For years I have said folks that can't successfully add one plus one should NOT be allowed to comment on economic and financial issues.
Zakaria in the past 24 hours perfectly proved my point (quotes from Monday's Post piece follow with commentary and video from "Fareed Zakaria GPS"):
The "Bush tax cuts," passed in 2001 and 2003, remain the single largest cause of America's structural deficit -- that is, the deficit not caused by the collapse in tax revenue when the economy goes into recession. The Bush administration inherited budget surpluses from the Clinton administration. What turned these into deficits, even before the recession? There were three fundamental new costs: the tax cuts, the Medicare prescription-drug bill and post-9/11 security spending (including the wars in Iraq and Afghanistan). Of these the tax cuts were by far the largest, adding up to $2.3 trillion over 10 years. According to the Congressional Budget Office, nearly half the cost of all legislation enacted from 2001 to 2007 can be attributed to the tax cuts.
The dishonesty here is astounding. In that last sentence, Zakaria wrote, "According to the Congressional Budget Office," and then linked to a January 2005 piece by the Center on Budget and Policy Priorities.
Nice little sleight of hand there, Mr. Zakaria, for when you claim something is according to someone or something, you should CITE that person or entity and NOT what someone wrote about that person or entity's views.
Beyond this, the CBPP is a liberal think tank. Even the liberal New York Times is willing to admit THAT!
But this is how shills like Zakaria propagandize the public.
All of the Bush tax cuts were unaffordable. They were an irresponsible act of hubris enacted during an economic boom.
The Bush tax cuts were enacted during an economic boom? Honestly, on what planet does this man live?
The first of these cuts was implemented in the summer of 2001 while the economy was still in the recession that began in March of that year.
As Zakaria clearly has forgotten, the economy began collapsing as the tech stock bubble imploded in 2000 and Americans saw their wealth plummet in a devastating bear market that didn't end until March 2003.
That Zakaria misrepresented this in his piece was a clear example of media malpractice.
As for the 2003 cuts, although the Gross Domestic Product was already beginning to tick up by then, unemployment remained troublesome as the economy was still shedding jobs each month. In fact, the Democrats and their media minions were pounding the President about a jobless recovery.
With this in mind, a second round of tax cuts was implemented.
Regardless of what Zakaria or his liberal think tank believe, these cuts worked, for the GDP in 2004 rose by 3.6 percent - its best showing since 2000! - and unemployment in the next several years dropped from a 2003 high of 6.3 percent to a 2007 low of 4.4 percent.
In the years that followed this second round of tax cuts, employers added over 8 million workers to their payrolls.
Sadly, what is missed in all this discussion concerning these tax cuts was that the desired goal of stimulating the economy and creating jobs was accomplished. Folks like Zakaria have a terrible memory concerning just how badly America was suffering after the tech bubble burst and the 9/11 attacks.
But this wasn't the only amnesia Zakaria experienced:
Bill Clinton raised taxes in 1992 and ushered in a period of extraordinarily robust growth.
Really? Clinton didn't take office in 1992, Fareed. He was ELECTED in '92.
Regardless of his slip of the keyboard, what shills like Zakaria conveniently ignore is that the economy was already booming BEFORE Clinton was inaugurated.
Counter to what the media were telling people at that time, the early '90s recession ended in the first quarter of 1991. After that, the GDP grew by 2.7 percent, 1.7 percent, and 1.6 percent the remaining quarters of that year. Not robust growth, but growth.
In 1992 BEFORE Clinton was inaugurated, the GDP grew by 3.4 percent, its best performance since 1989. Yet, after Clinton's 1993 tax hikes, the GDP only grew by 2.9 percent that year.
More importantly, what Zakaria conveniently omitted from his piece was that in 1997, the Republican controlled Congress FORCED Clinton to sign the Taxpayer Relief Act of 1997 significantly CUTTING taxes.
Also missing from Zakaria's pathetic Post piece was that THIS was when the economy was REALLY going to take off as the GDP grew by 4.4 percent in '97, 4.5 percent in '98, 4.8 percent in '99, and 4.1 percent in '00.
So much for tax cuts HURTING an economy, Mr. Zakaria.
As for budgetary impact, the surpluses ALL happened AFTER these tax cuts were implemented in fiscal years '98, '99, '00, and '01!
So much for tax cuts causing deficits, Mr. Zakaria.
In the end, what shills like Zakaria refuse to either understand or admit is that much like your household budget, deficits are caused by overspending.
Let's assume that the outlays in Clinton's final budget only grew at the rate of inflation in the years that followed. What would our budget look like today?
Well, $1.863 trillion was spent in fiscal 2001. If this grew at the rate of inflation, we would be spending $2.295 trillion in fiscal 2010. We're projected to bring in $2.165 trillion in total tax receipts.
This would produce a highly-manageable $130 billion deficit, a far cry from the projected $1.6 trillion.
Furthermore, as tax receipts are projected to grow to $2.567 trillion next year, we could actually have a SURPLUS in 2011 - even with the devastating effects of the last recession - if we had only kept spending increases at the rate of inflation.
Of course, we didn't and next year we're budgeted to spend $3.833 trillion or more than TWICE Clinton's last budget.
With this in mind, despite the claims by shills like Zakaria, our budgetary crisis has NOTHING WHATSOEVER to do with the Bush tax cuts.
Furthermore, we have experience with raising taxes during bad economies, for Franklin Delano Roosevelt did it in 1937 resulting in a deepening of the Depression.
That folks on the Left and in the media want to repeat this same mistake with the current economy teetering on the edge of a cliff is disgraceful.
In conclusion, I offer for your amusement Zakaria's pathetic segment on Sunday's "GPS." Now that you are armed with all the facts, this should give you a good laugh: