History Lesson: Why The Bush Tax Cuts Were Enacted
(By Glenn Kessler
, TheWashingtonPost, 19 December 2012)
With federal revenue soaring in 2000,
generating budget surpluses, there was pent-up desire for a tax cut, especially
among Republicans. George
W. Bush had just been elected on a pledge to cut taxes, but his plan did not
get much traction among Democrats until then-Federal Reserve chairman Alan
Greenspan warned Congress of a dangerous new specter — that the
government would pay down the national debt, and there would be no place to
park excess funds. “At zero debt, the
continuing unified budget surpluses currently projected imply a major
accumulation of private assets by the federal government,” he declared. Yep, you read that right. The perceived
danger was — believe it or not — that there would be no national debt left.
Greenspan, however, offered caveats and
warnings that were largely ignored by Congress. In fact, he said that any tax
cuts should have triggers that would halt them “if specified targets for the
budget surplus and federal debt were not satisfied.” In other words, the tax cuts would have been
terminated or reduced, depending on the nation’s economic circumstances —
precisely the tactic Republicans said was a non-starter in the 2011
debt-ceiling debate. “We need to resist
those policies that could readily resurrect the deficits of the past and the
fiscal imbalances that followed in their wake,” Greenspan said, back when the
federal debt was $5.7 trillion. (It is $16.3 trillion today.) The tax cut that emerged a few months later
was a classic congressional compromise — a hodgepodge of rate cuts and
special-interest tax provisions that actually was much larger than officially
scored. It is frequently reported that the tax cut reduced revenues by $1.35
trillion over 10 years, but that’s not accurate.
Moderate Democrats, in fact, thought they
had won a large victory when they forced through a budget resolution that cut
the tax cut from $1.6 trillion to $1.35 trillion. Thus, because the Senate at
the time was split 50-50, with Vice President Richard Cheney casting the
deciding vote, the tax cut would have to fit within the terms of the congressional
budget resolution in order to avoid a filibuster. But then Republicans cleverly terminated the
tax bill after just nine years, meaning they could fit what in effect was a $1.6 trillion tax cut within a 10-year
box. (The tax cut
would have terminated after 10 years because of arcane Senate budget rules, but
this way, Bush was able to have his cake and eat it too.)
Few people understood at the time the
significance of this shift — and even fewer today remember what happened. Ironically, no one was really happy with the
resulting tax package — especially conservatives. “Conservatives view Bush's legislation not as
an important economic or philosophical statement that shows what Republicans
stand for, the way President Ronald Reagan’s tax cut did two decades ago,” we
wrote in The Washington Post at the time. “Instead, the Bush tax cut is
generally considered a political document, filled with gimmicks and trade-offs that
drain it of any real impact.”
As Stephen Moore, president of the Club
for Growth, a tax cut advocacy group, put it: “It provides almost zero help for
the economy over the next two years and modest help over the next decade.” Yet almost 13 years later, the Bush tax cut
has become sacrosanct. The Club for Growth on Wednesday warned Republicans not to vote for House Speaker John
Boehner’s “Plan B” proposal to raise taxes only on people making more than $1
million a year.
The Biggest Pinocchios Of 2012
(By Glenn Kessler,
TheWashingtonPost, 21 December 2012)
Virtually all of this year’s fact checking
was focused on the presidential election. So, in selecting our biggest
Pinocchios of the year, we spent days going though old columns and reliving an
election that seems rather distant now. In
many ways, it was depressing reading. So much of the campaign was fought over
trivial or inconsequential issues. For instance, we wrote nearly 20 columns
dissecting every possible claim about Mitt Romney’s career at Bain Capital,
which came under attack both from his Republican rivals and the Obama campaign.
Romney left himself
open to scrutiny because he incorrectly
claimed that he helped create more than 100,000 jobs at Bain — he
mainly created wealth for his investors — but the attacks often were equally
false. A candidate’s experience and background is certainly worthy of debate,
but all too often in 2012 it just turned into a game of political gotcha.
In this election,
fact checking certainly became part of the conversation, with many additional
news organizations joining FactCheck.Org,
PolitiFact and
The Washington Post in scrutinizing politician’s statements, especially during
the debates. Since fact checking is a relatively new genre of journalism,
however, it is frequently misunderstood. Fact checking is a
complement, not a replacement, for other reporting. Good beat reporters
obviously are well-placed to analyze issues and spot falsehoods, and that’s an
essential part of their jobs. But, especially in a political season, it is
difficult to analyze every claim and counterclaim while also writing day-to-day
stories about the news.
Fact checkers, by
contrast, can dig deeply into an issue or even a single statement. We can help
explain, at length, how a politician justifies his or her assertion and whether
there is much of a factual basis for it.
Some commentators said after the election that fact checkers had failed
because politicians kept saying misleading things. That’s ridiculous. Fact
checkers are not trying to change the behavior of politicians. We are simply
trying to inform voters. Indeed, after
more than 30 years of writing about Washington institutions, we believe there
is little difference between Democrats and Republicans in terms of twisting the
facts and being misleading when it suits their political purposes. So if a
politician believes he or she has a winning argument that moves voters — such
as attacks on Romney’s Bain record — then there is little motivation to drop
that argument simply because a journalist says it is misleading.
While we deal in
the facts, the most difficult — and controversial — part of the job is
assigning the number of Pinocchios at the end of the column. We try our best to
be consistent, but by its nature the rating is somewhat subjective. It gets
especially difficult in the Two- versus Three-Pinocchio realm. We appreciate
informed commentary by readers and critics — such as Mark
Hemingway in the Weekly Standard and Sean
Higgins in the Washington Examiner — who have pointed out our leaps in
judgment or inconsistency of standards. Still,
a study
by George Mason University’s Center for Media and Public Affairs released in
October found that this column split its ratings almost equally between the two
parties. In compiling this list, we
primarily focused on claims that had earned Four Pinocchios during the year. To
keep it simple, we have shortened the quotes in the headlines. Click on the
headlines to read the original column.
Senate Majority Leader Harry Reid (D-Nev.) made this inflammatory charge, repeatedly, without offering any evidence except for vague references to receiving a phone call from someone who had invested with Bain Capital. At the time, Romney (citing dubious precedent) had only made public two years of tax returns — though he later released a summary prepared by his accountants showing he had paid federal and state taxes in each of the past 20 years. But in any case, Reid was reckless in making such a claim without any evidence to back it up.
This was the key point of a 4-Pinocchio television ad that the Romney campaign aired in Ohio during the waning days of the campaign. As we noted at the time, it was a sign of desperation. The series of statements in the ad individually may have been technically correct, but the overall message of the ad was clearly misleading — designed to piggyback off of a claim by Romney during a speech that Chrysler was moving Ohio factory jobs to China. Even more remarkable, the Romney campaign fiercely defended the ad, even as it came under harsh criticism from, among others, Chrysler.
This line came from an Obama campaign ad that managed to jumble together a series of inaccurate claims about Romney’s business experience. He wasn’t a corporate raider, he did not outsource jobs to China and Mexico and as governor he did not outsource jobs to India. (With the support of liberals and conservatives, he vetoed a bill that would have terminated at state expense a $160,000 phone-service contract. The jobs returned to the United States when the contract ended.) Special mention should also be made of a 29-minute video released by a pro-Newt Gingrich Super PAC, titled “King of Bain,” which also made wildly inaccurate claims about Romney’s business career.
President Obama repeatedly reminded voters that he became president during a grim economic crisis. But he went too far when he claimed that only 10 percent of the federal deficit was due to his own policies. About half of the deficit stemmed from the recession and forecasting errors, but a large chunk (44 percent in 2011) were the result of Obama’s actions. At another point, Obama falsely suggested that the Bush tax cuts led to the Great Recession.
For a business executive, Romney sometimes had trouble with numbers. He claimed that he would create 12 million jobs in his first term, touting an energy plan (3 million), a tax plan (7 million) and cracking down on China (2 million). But these numbers came from studies that often had little to do with Romney’s policies — or had time lines as long as a decade. In other words, the figures bore no relation to reality.
This ad by the pro-Obama Super PAC Priorities USA Action featured a steelworker, Joe Soptic, who blamed Romney for the death of his wife after he lost his health insurance when the steel plant closed. But Romney was no longer actively managing Bain when the plant closed — and Soptic’s wife did not die until five years later. She also continued to have health insurance for a number of years after the plant closed. It is also quite likely that Bain’s involvement extended the life of a dying steel plant, in which case Soptic kept his insurance longer than he might have expected.
Former senator Rick Santorum (R-Penn.) made this claim during the GOP presidential primaries, spawning huge headlines in the Netherlands. He even claimed that the elderly in the Netherlands wear “do not euthanize me” bracelets. But there was not a shred of evidence to back up his claims. About 2 percent of deaths in Holland are from euthanasia, with virtually no reports of action being taken without the explicit request of the patient.
We recently explained why this claim — a feature of the current “fiscal cliff” debate — is simply historical myth — and a deal that President Ronald Reagan himself misunderstood. (He makes this assertion in his memoir.) The agreement was not 3:1, but more like 1:1. Congress actually delivered on a good hunk of the spending cuts, but the Reagan administration failed to do its part. So this bit of historical fiction should be dropped from the political discourse.
No comments:
Post a Comment