Numerous mainstream outlets are reporting on Jeb Bush's proposal to lower income tax rates and reduce exemptions as being “populist” and anti-Wall Street, ignoring that his proposal offers no means of making up for lost revenue and is essentially a retread of mainstream Republican tax policy, including George W. Bush's disastrous tax cuts from 2001 and 2003.
Jeb Bush Debuts Tax Plan Very Similar To His Brother's
Bush Promises “4% Economic Growth” By Cutting Corporate, Personal Income Tax Rates. In a September 8 op-ed published by The Wall Street Journal, Republican presidential candidate Jeb Bush attacked what he called an “anemic economy” during the Obama administration, and claimed that the only way to guarantee “accelerating [economic] growth” was “a complete overhaul of the U.S. tax code.” Bush's so-called “overhaul” includes reducing the top marginal income tax rate to 28 percent, reducing corporate tax rates to just 20 percent, and eliminating what he called “lobbyist-created loopholes” in the tax code that advantage high-income filers. Bush concluded his argument by pointing to economic growth in Florida during his tenure as governor as proof that his tax cutting policies will work:
Low growth, crony capitalism and easy debt -- that's President Obama's economic agenda in a nutshell, and the tax code has helped make it possible. It's past time for a change.
I know that enacting these policies works because I've done it before. As governor of Florida, I cut taxes every single year -- returning a total of $19 billion to Floridians. The state's economy took off, growing at an average rate of 4.4%. Households saw bigger paychecks as median incomes rose by an average of $1,300. Florida's pro-growth climate created 1.3 million new jobs. And we did it all while balancing the budget eight years in a row and increasing the state's rainy-day fund by $8 billion. [The Wall Street Journal, 9/8/15]
Univision Published A Spanish-Language Version Of Bush's Tax Plan. On September 9, Univision Noticias published a Spanish-language version of Bush's tax reform plan at Univision.com. [Univision Noticias, 9/9/15]
Media Paint Bush Tax Plan As A “Populist” Reform Proposal ...
New York Times: “Populist” Bush Plan Challenges Conservative Tax Policy. In a September 9 article, The New York Times called Bush's tax reform proposal “a populist plan,” and claimed it challenges conservative policy on taxes and the economy:
Former Gov. Jeb Bush is challenging some long-held tenets of conservative tax policy with a populist plan that targets valuable deductions that benefit the wealthy and the “carried interest” loophole that has enriched hedge fund managers for years.
The plan is intended to spur the economy to grow at an annual rate of 4 percent by giving companies incentives to invest domestically and by easing the tax burdens on low and middle-income families. [The New York Times, 9/9/15]
Wall Street Journal: Bush Tax Plan “Takes Aim” At The Wealthy. In a September 9 article, The Wall Street Journal framed Bush's tax reform plan as one that goes after tax breaks for corporations, special interests, and the wealthy, and highlighted the candidate's claim that his policies would “spur economic growth” and benefit low and middle-income workers:
But in a nod to the populist anger roiling both parties, Mr. Bush, a former banker, went a step further than most Republicans by taking aim at a range of tax breaks that benefit specific industries and companies, as well as wealthy individuals who have figured out how to shield chunks of their income from the Internal Revenue Service.
In a speech here outlining the proposal, Mr. Bush predicted his proposal would spur economic growth and shift more of the tax burden away from lower- and middle-income Americans to their richer neighbors. It is an argument designed in part to insulate Mr. Bush from the sort of attacks that dogged 2012 GOP nominee Mitt Romney,who was accused of favoring the wealthy over the working class.[The Wall Street Journal, 9/9/15]
Politico: Bush Tax Plan “Hits Wall Street.” In a September 8 article titled “Jeb Bush tax plan hits Wall Street,” Politico described the Republican's proposal to close the so-called “carried interest loophole,” which allows some high earners to pay the lower capital gains tax rate on large chunks of income, as a “populist move”:
His plan would also cut rates on capital gains and dividends to 20 percent with one notable exception: carried interest. His plan targets the tax provision that allows some private equity and hedge fund managers to characterize earnings as capital gains, allowing them to pay much lower rates than if it was considered ordinary income.
That's a populist move that comes after rival Republican presidential candidate Donald Trump also complained about the provision, saying the tax code allows hedge fund managers to “get away with murder.” [Politico, 9/8/15]
The Hill: Bush Is Trying To Tap “Populist Sentiments” With Tax Plan. A September 8 article in The Hill claims that the tax reform plan is Bush's attempt to appeal to populists by ending a tax break for hedge fund managers:
Republican presidential candidate Jeb Bush proposes scrapping a tax break prized by Wall Street as part of a new plan that would sharply lower tax rates for both individuals and businesses.
Bush's plan received quick praise Tuesday from the GOP's business wing, which has long lobbied to cut the corporate tax rate.
But in proposing to roll back the so-called carried interest incentive, Bush is also seeking to tap into the populist sentiments that have helped propel businessman Donald Trump to the top of the GOP polls. [The Hill, 9/8/15]
... Ignoring Glaring Revenue Shortfalls, Past Tax Cut Failures
Krugman: Bush's “Almost Pathological” Embrace Tax Cuts Prove He Learned Nothing From His Brother's Failed Policies. In a September 9 blog post for The New York Times, Nobel Prize-winning economist Paul Krugman ridiculed Bush's tax cutting scheme. Krugman pointed to the fact that the American economy is producing private sector jobs faster since President Obama raised taxes on the wealthy in 2013 than it ever did after George W. Bush lowered taxes in 2003:
And just look at the chart above, which compares private sector job creation after that pro-growth tax cut and after the job-killing 2013 Obama tax hike. As you can see -- hmm, that doesn't seem to go the right way, does it?
It's almost pathological how Jeb! seems to have learned nothing from what didn't work under Bro! Why, next thing he'll be saying that he's leaning on W's advice for dealing with the Middle East. Oh, wait. [The New York Times, The Conscience of a Liberal, 9/9/15]
Bernstein: Bush Tax Plan Is Like “Reverse Robin Hood.” In a September 9 column in The Washington Post, economist Jared Bernstein argued that Bush's plan will likely be a major tax break for companies and high-income earners. Bernstein also highlighted that Bush's tax cuts would create a major revenue shortfall, and that the likeliest way to close the revenue gap would be to cut spending for those in need:
That means you either make up your losses by going after the less well-off, running larger budget deficits, or cutting spending. Re the latter, since Bush is unlikely to cut defense spending, he either goes after entitlements, or more likely, spending on low-income populations. In either case, since social insurance and safety net spending disproportionately help people in need, this is yet another version of RRH tax policy -- Reverse Robin Hood. [The Washington Post, 9/9/15]
New York Times Analysis Finds Bush Plan Cuts Taxes The Most For Multimillionaires. In a September 9 post on The New York Times' blog The Upshot, Josh Barro, citing The Times' internal analysis, found the Bush plan would enormously benefit multimillionaires and effectively recreate tax conditions for the ultrarich that “prevailed under his brother”:
According to an analysis by The New York Times, Mr. Bush's tax plan would reduce the effective income tax rate on filers making $10 million or more per year to approximately 21 percent, down from 26 percent in 2013, the most recent year for which data are available. The average taxpayer in this group earned $29.2 million in 2013, meaning the plan proposed by Mr. Bush would have saved them an average of $1.5 million that year.
High earners were hit with a large tax increase in 2013, because of the partial expiration of the George W. Bush tax cuts and new taxes in the Affordable Care Act. Jeb Bush's tax plan would lower the tax burden on the wealthiest to near the levels that prevailed under his brother. [The New York Times, The Upshot, 9/9/15]
Slate: Bush's Plan Is A “Budget-Wrecking Gift To The Wealthy.” In a September 10 column, Slate's Jordan Weissman argued that the Bush tax plan is a “budget-wrecking gift to the wealthy,” pointing to analysis from the conservative-leaning Tax Foundation, which found that Bush's tax cuts would create a $1.6 trillion to $3.7 trillion dollar federal budget shortfall over a decade:
After Jeb Bush debuted his big tax plan& Wednesday, those who weren't distracted by its populist feints quickly observer that the proposal was almost certainly going to be a budget-wrecking gift to the wealthy, much like his brother's own notorious tax cut. Today we have confirmation of that, courtesy of the conservative Tax Foundation.
The Tax Foundation, which even for a right-leaning organization is unusually optimistic about the ability of tax cuts to spur growth, thinks all this would do wonders for the economy. It predicts that, long-term, gross domestic product would be 10 percent higher under Bush's plan, wages would get a 7.4 percent boost, and that the country would tack on an extra 2.7 million jobs. Again, don't take these numbers as gospel--as one economist memorably put it to the New York Times, some of the Tax Foundation's recent work “would not pass muster as an undergraduate's model at a top university.” The point is, they think that, like water from Moses' rock, the Jeb plan would unleash a gusher of growth, which would help make up for some of the revenue lost from lowering rates.
But even with those sunny assumptions, they find that the Jeb plan would still punch a massive hole in the budget. Assuming no extra growth, it would increase the deficit by $3.7 trillion over a decade. With their predictions about growth stirred in, the deficit would increase by $1.6 trillion. The problem is obvious: Wiping out deductions can't balance out the sorts of rate cuts and the wholesale elimination of things like the estate tax that Bush envisions. [Slate, 9/10/15]
Wash. Post: Bush “Can't Learn From Economic History.” In a September 9 post for The Washington Post's Plum Line blog, Paul Waldman called out the Bush tax plan for being “tax cuts for the wealthy.” Waldman compared Jeb Bush's plan to President George W. Bush's tax plans, which did not lead to economic growth:
Jeb Bush released the first details of his tax plan today in a Wall Street Journal op-ed, so we finally learn the secret that will produce spectacular growth, great jobs for all who want them, and a new dawn of prosperity and happiness for all Americans. Are you ready?
It's...tax cuts for the wealthy! If only we had known that this amazingly powerful tool was available to us all along!
We've had this debate again and again in recent years, and every time, events in the real world prove Republicans wrong, yet they never seem to change their tune. When Bill Clinton's first budget passed in 1993 and raised taxes on the wealthy, Republicans said it would cause a “job-killing recession”; what ensued was a rather extraordinary economic boom and the first budget surpluses in decades. When George W. Bush cut taxes in 2001 and 2003, primarily for the wealthy, they said that not only would the economy rocket forward into hyperspace, but there would be little or no increase in the deficit because of all that increased economic activity. What actually happened was anemic growth and dramatically increased deficits, culminating in the economic catastrophe of 2008. When Barack Obama raised taxes, Republicans said the economy would grind to a halt; instead we've seen sustained job creation (despite weak income gains). [The Washington Post, Plum Line, 9/9/15]
Wash. Post: Bush's Plan “Doesn't Quite Add Up.” The editorial board of Washington Post responded to the Bush plan in a column on September 9. The board noted that economists scoring the plan predicted a $1.2 trillion to $3.4 trillion loss in revenue over 10 years. The board stated the federal budget is already strained with spending caps, and obligations to fund Social Security and Medicare:
Mr. Bush's plan would reduce federal revenue -- a lot. An analysis from Mr. Feldstein and three other economists estimates that, without accounting for any added economic growth the plan might spur, the tax scheme would lose the government an astonishing $3.4 trillion over 10 years. A “dynamic” analysis estimating the effects of added economic growth still predicts a loss of $1.2 trillion.
Mr. Feldstein and his colleagues suggest that this budget hole can be made up by cutting spending, and Mr. Bush's campaign staff promises more proposals that will illuminate the whole picture. Yet the budget is already strained against strict spending caps. The impending rise in old-age costs promises to hollow out the government's capability to do much of anything but send out Social Security checks and finance Medicare. [The Washington Post, 9/9/15]