Instead of stimulating the economy as intended, Bush’s tax policy – largely huge tax cuts for the upper income brackets – has had a long-term detrimental impact on the recovery after the 2001 recession. A report published in the United Auto Workers’ (UAW) Research Bulletin explains that while increases in GDP appear to signal a strong economy, most of that growth resulted from lowered interest rates (not part of Bush’s policy) and enormous increases in defense spending (with relatively few added jobs). Meanwhile, the primary focus of the administration, tax cuts, has proven to be both an inefficient method of economic stimulus and may have put the brakes on a broader recovery.

The 'recovery' under the Bush administration has basically been an extended recession for the majority of working people. Over the last 30 months GDP growth has grown at only an annual rate of 2.5 percent – one of the lowest of any similar period since the 1940s. Employment is lower. The average length of unemployment is one of the longest since the 1930s. There has been an unprecedented decline in labor force participation. If the participation rate had not fallen, the unemployment rate would have averaged over 6.5 percent since 2001. When compared with other recoveries, in the 2 1/2 years since the recession ended, wages and salaries as a share of total national income growth have never been lower (15.1 percent), while profits as a share of income growth are at a record high (46.9 percent). Real household net worth has fallen since 2001, and personal bankruptcy and mortgage foreclosure rates are at or near record highs.

Something is wrong. According to Economy.com, what is wrong is the special emphasis of the administration’s tax policy on the upper income groups. While, spending on unemployment benefits, providing larger tax cuts to lower incomes, and increasing aid to states would have generated much higher rates of GDP growth, the administration instead focused its spending efforts on tax cuts such as estate taxes, business taxes, dividend taxes and other taxes that are aimed at very high income individuals or corporations. While every dollar spent on unemployment benefits, tax cuts for the lowest income brackets or funding for the states generates an additional $1.24 to $1.74 in GDP growth, tax cuts on estate taxes and dividends generates little or nothing.

According to the experts, Bush’s 'trickle down' policy produces only very weak results because this kind of income is designed to be accumulated not circulated back into the economy through consumer spending as does a stimulus package aimed at lower income people. In market-driven capitalism, spending money on goods and services helps the economy grow by keeping demand strong and people employed. As the UAW Research Bulletin argues, 'the greatest bang for the buck comes from helping unemployed workers, passing tax cuts that help low and middle-income families … and helping states.'

A weak recovery has been the immediate result of Bush’s tax policy. But the huge deficits that the administration has created will have a severe, long-term impact also. Upward pressure on interest rates and increased debt will mean slower economic growth combined with tax increases and deep cuts in social spending in the future. Among the little-publicized spending cuts Bush has already mapped out in his 2005 budget are massive cuts in Social Security, Medicaid and Medicare benefits, $660 million from Title I education funding, $5.7 billion from veterans’ services, $330 million from worker training programs, $310 from Women, Infants and Children (WIC) and $650 million from Head Start.

So why doesn’t Bush just follow the advice of economists who provide a better formula for creating economic growth? First, it has long been clear that this administration would never do much to directly benefit working people. It is ideologically predisposed to not care about our needs. Second, the driving idea of this regime is to destroy public programs – regardless of their wide benefit and the growing need for their services – and to hand over the federal coffers to big business and the wealthy. Finally, far from being a 'compassionate' administration, Bush and his people are among the most cruel and uncaring rulers on the planet.

Unless Bush is replaced on November 2 by an administration that understands the importance of shifting tax relief and social spending to workers and programs that benefit working people, we can expect to continue to be hammered by policies that favor the wealthy and protect the profits of the largest corporations at our expense. We can expect to continue seeing falling incomes and economic hardship. We can also expect enormous redistribution of wealth from the lowest incomes to the richest incomes and the burden of huge deficits on our children. Because we are in such need of desperate relief, we simply cannot afford one more day with Bush in office.



--Joel Wendland is managing editor of Political Affairs and can be reached at jwendland@politicalaffairs.net.