Ed Schultz Lies About Bush Tax Cuts Seconds After Saying 'Republicans Make Stuff Up'
As NewsBusters has been reporting, America's media have been on a full-court press to raise taxes ever since Barack Obama proposed this in his deficit reduction speech last Wednesday.
So supportive of soaking the rich is MSNBC's Ed Schultz that on Monday's program bearing his name, seconds after claiming "Republicans are forced I guess you could say to make stuff up," he lied about what happened after taxes were cut by President George W. Bush (video follows with transcript and commentary):
ED SCHULTZ: In the fight over taxes, Democrats have simple fairness on their side. They have simple math on their side, and polls show that Americans favor ending tax cuts for the wealthy. So Republicans are forced I guess you could say to make stuff up, but they do a pretty good damn good job of that, don’t they? Like Congressman Joe Walsh, Republican of Illinois talking about how tax cuts increase revenue to the government.
(BEGIN VIDEO CLIP)
REPRESENTATIVE JOE WALSH (R-ILLINOIS): Every time we’ve cut taxes, revenues have gone up.
(END VIDEO CLIP)
SCHULTZ: EVERY TIME! Republicans just love that saying: “Every time we’ve cut revenues, we’ve cut taxes, revenues have gone up.” I doubt it. But when the Bush tax cuts went into effect, revenues went down. Even taking into account the impact of 9/11, there was no reason to believe the Bush tax cuts helped the to raise revenue. Even seven years later, revenues were lower than before the Bush tax cuts went into effect.
Notice that the source of information for that graph was supposedly the Office of Management and Budget:
I'm not sure who did this research for Schultz, but here are the numbers directly from OMB:
Above is a screencap from page 22 of OMB's "Historical Tables: Budget of the United States." The column on the left represents total unified tax receipts, the center is total unified expenditures, and the right is the associated surplus or deficit.
The first Bush tax cuts happened in 2001 when we brought in $1.991 trillion in receipts. This declined for two years, then started increasing, and by 2005 not only were receipts higher than in 2001, they were also higher than the previous record set in 2000.
"Even seven years later, revenues were lower than before the Bush tax cuts went into effect."
Not even close. Revenues in 2008 were $2.523 trillion, $532 billion or 27 percent higher than 2001.
Where Schultz got his information is beyond me - and likely beyond him. So much for Democrats having "simple math on their side."
One other point before we move on: notice that revenues actually peaked at $2.568 trillion in 2007. That was the last year the Republicans controlled the White House and both chambers of Congress.
After four years of Democrat control of the legislature, and two-plus years of Obama, tax receipts have yet to get back to where they were when Republicans ran everything.
It of course goes without saying Schultz would view this as me being forced to make stuff up despite the facts speaking for themselves.
As for the initial decline in tax receipts after the first Bush cuts were implemented, the Congressional Budget Office began asking why that was happening as early as August 2002 (emphasis added):
Spring 2002 brought an "April surprise" of a type that had not been seen for roughly a decade: federal revenues substantially lower than expected, a reversal of the pattern that characterized the late 1990s. Even though the current fiscal year is nearly over, revenue forecasters have substantially revised their expectations of how much fiscal year (FY) 2002 revenues will be as a consequence of April, May, and June receipts. A fiscal year that began with a forecast of a budget in approximate balance now faces a deficit of $157 billion, $103 billion of which results from revenues that are lower for reasons other than the effects of legislation. That latest revision comes on top of downward revisions from last August and January. [...]
The most obvious explanation for what happened to receipts is the recession, which has reduced the level of economic activity--the main determinant of tax collections. Although CBO incorporated effects of an economic slowdown in its baseline as early as January 2001, its projections did not reflect the effects of a recession until the January 2002 baseline, after the seriousness of the downturn had become evident. Since then--although indications are that the economy has begun recovering--the recession's effects on receipts still linger.
So, $103 billion of the reduction in revenues up to that point were not caused by the Bush tax cuts, but instead the recession.
By January of 2003, the CBO offered another reason for the huge decline in revenues: an unexpected drop in capital gains taxes associated with the fall in the stock market. Even the liberal think tank the Center for Economic Policy Research couldn't hide the truth:
The Congressional Budget Office (CBO) acknowledged that the deflation of the stock market bubble will seriously depress capital gains revenue in its new economic and budget projections. Prior to this year, CBO had continued to project that capital gains tax revenue would be larger than its historic share of GDP over its ten-year projection period. It clung to these projections in spite of the fact that its own profit projections implied that the stock market was hugely over-valued and was virtually certain to collapse within its projection period.
The downward adjustment in the projections for capital gains tax revenue has a serious impact on the future budget projections. The new projections show that revenue from capital gains taxes will be $428 billion less than was indicated in the January 2001 projections (for the over-lapping years), which were the most recent projections at the time President Bush’s tax cut was approved. Including the effect of interest, the 10-year surplus projections would have been $516 billion lower in 2001, if the current capital gains projections had been used.
Readers are advised to review those two paragraphs again, for in them lies the heart of the so-called Clinton surpluses and why they disappeared.
What shills like Schultz don't know, and folks like the New York Times's Paul Krugman and former Clinton labor secretary Robert Reich refuse to share with the public, is that the Clinton surpluses beyond 2001 were an illusion created by tremendously optimistic assumptions by the CBO.
Tax receipts exploded in 1998, 1999, and 2000 as a result of the stock market bubble and the resulting dramatic rise in capital gains taxes. CBO projected that such increases would continue for the next ten years resulting in surpluses as far as the eye can see.
When the bubble began to burst in March 2000, and the economy receded twelve months later, CBO clung to the expectation that these revenues were still going to materialize. As CEPR noted in its report, it wasn't until January 2003 that CBO realized its error and began seriously revising down its revenue targets and up its deficit projections.
Regardless of what shills like Schultz, Krugman, Reich, and virtually all of the liberal media have been saying for the last decade, the Bush tax cuts didn't turn surpluses into deficits. It was instead a mixture of terrible forecasting by CBO, a plummeting stock market with a resulting decline in capital gains taxes, and a recession caused by a bear market that began ten months before Bush was inaugurated.
You can beat your head against a wall trying to get a liberal media member to acknowledge any of these immutable facts, so don't bother wasting your time.
As for this lie by Schultz, it's becoming so commonplace on this joke of a so-called news network that MSNBC executives must be numb to it, but that doesn't explained why the folks at Comcast and General Electric put up with it.
*****Update: NBer DonShock accurately notes in the comments section that despite Schultz's chart saying "In $ Billions," he must have meant as a percentage of GDP.
Let's analyze that. First off, even "In $ Billions" is wrong. It should have read "In $ 100 Billions." However, if the y-axis was correctly labeled "Percent of GDP," it would have proven the point that tax cuts spur the economy.
Here's GDP in gross annual dollars from the Bureau of Economic Analysis:
As such, despite the impacts of 9/11, a collapsing stock market and the resulting recession, GDP grew in gross dollars by 40 percent in the seven years after the first Bush tax cuts. As tax revenues also grew during this period, the reason why their percentage of GDP dropped was due to GDP rising faster than receipts.
Since the goal of tax cuts is to grow the economy, it's clear they accomplished their goal.
To put a finer point on this, Schultz's very next comment was:
The effect of tax rates for the 400 richest Americans -- well, they've dropped since 1995 -- and, boy, they went out and just created a ton of jobs, didn`t they? No, they did not. It's a fallacy. It's a failed policy.
Here's what happened to jobs in this nation once the Bush tax cuts took effect (from the Bureau of Labor Statistics):
So, after the Bush tax cuts: the recession ended, GDP grew by 40 percent in gross dollar terms, tax revenues increased, and jobs were created.
And this is what Schultz sees as "failed policy."
Actually, the failed policy is what's happened since the Democrats took over Congress in 2007: a serious recession started, GDP declined, tax revenues plummeted as did jobs - all while the federal debt exploded by almost $6 trillion!
This is what Schultz and the other shills in the media consider successful policy.