Governors like Jeb Bush just love to brag about how they balanced their states’ budgets. They’re counting on voters not realizing that, unlike the federal government, virtually all states are required — either by law or by their constitutions — to have balanced budgets. When Jeb Bush boasts that he balanced Florida’s budget “eight years in a row,” that really just means he spent eight years in office.
People too young to remember the campaign may wonder how Jeb’s brother George W. Bush persuaded the country that budget-busting tax cuts for the richest Americans were the prescription the country needed. The answer is that he simply lied. In speeches, in televised debates, and in advertisements he represented his plan as consistent with a continued budget surplus and as primarily benefiting middle-class taxpayers.
Bush won the election and enacted hundreds of billions of dollars in tax cuts. Surpluses turned into deficits, and the promised economic boom never materialized.
None of this was particularly surprising to anyone who cared to research the details. The problem was political reporters had found those details much less exciting than making snide and derogatory comments about Al Gore’s wooden speaking style and complaining that his “demeanor” was disrespectful during a debate exchange in which Bush repeatedly attacked Gore with bogus math.
This, of course, was already the norm in 2000, as “journalism” had long-since disappeared fron the main stream media.
According to the practices predominant at the time, to offer a view on the merits of a policy controversy would violate the directives of objective journalism. Harping on the fact that Bush was lying about the consequences of his tax plan was shrill and partisan. Commenting on style cues was okay, though, so the press could lean into various critiques of Gore’s outfit. I’m sure we’ll hear much the same about Hillary Clinton in the months ahead.
Today it’s clear that Jeb Bush is very much his brother’s inheritor, both in terms of a love of regressive tax cuts and in terms of a passion for making the case for them in a dishonest way. And reading the mainstream political reporters characterize the Jeb tax plan as “populist” or some kind of break with conservative orthodoxy corresponding with endless front-page coverage of every new micro-development in the Hillary Clinton email inquiry is giving me a very uncomfortable sense of déjà vu.
The good news is that new policy-focused verticals like the Upshot and Wonkblog at the New York Times and the Washington Post are doing a much better job of covering this round of Bush tax cuts. There is also valuable fact-based reporting in the few remaining national publications, as detailed here:
- Josh Barro of the New York Times focuses on the regressivity of the plan, i.e., the disproportionate cuts for those at the top of the income scale. Remember, in our age of inequality, these are the folks who are already doing better than the rest, so tax plans like this one take a pretax inequality problem and make it a bigger post-tax inequality problem. Barro estimates that the Bush plan would boost the after-tax incomes of people making over $10 million by an average of 6.8 percent; for the average taxpayer in that group, that would have meant savings of about $1.5 million in 2013.
- Catherine Rampell of the Washington Post takes a similar tack, backing out how the plan would affect a rich guy like Jeb Bush himself. Her “quick-and-dirty, back-of-the-envelope calculations based on Bush’s 2013 tax return [suggest that] his liability for that year would have fallen by about $800,000, or about a quarter of what he paid Uncle Sam.” This result doesn’t mean that Jeb!’s motivation was a reduction in his own tax bill, she stresses. But it certainly underscores how much of a boon the plan is to well-off Americans.
- John Cassidy of the New Yorker points out that neither of the Bush boys listened closely enough to their dad: “[Won’t Jeb’s] plan inflate the deficit…? Not in the make-believe world of “voodoo economics” — the term that Jeb’s father, George H. W. Bush, used in criticizing Ronald Reagan’s tax-cutting plans during their G.O.P. primary tussle, in 1980.” By sprinkling supply-side fairy dust, along with, to be fair, some of the minor offsets I noted in my earlier piece, “these policies will unleash increased investment, higher wages and sustained four per cent economic growth, while reducing the deficit,” according to the candidate. But as Cassidy reminds us: “Anyone whose memory extends back to the seventies and eighties will find this language depressingly familiar. The original iteration of voodoo economics didn’t merely involve cutting taxes and directing the bulk of the gains to the ultra-wealthy…The ‘voodoo’ accusation arose from the claim that, because the policies would encourage people to work harder and businesses to invest more, a lot more taxable income would be produced, and the reductions in tax rates wouldn’t lead to a commensurate reduction in the amount of tax revenues that the government collected.”
For the record…didn’t happen.
- Few know this line of argument and history better than Bruce Bartlett, who worked in both the Reagan and Bush I administrations. He debunksthe tax-cuts-will-spur-growth-that-reaches-everyone idea over at MSNBC. As Bartlett notes, “The people advising [Bush] have an unblemished record of being wrong and always claiming that tax cuts for the ultra-wealthy will cure all the economy’s ills. The only effect of this discredited ideology has been to make the rich richer while doing nothing for the average American.”
- The first partial analysis of the plan by experts (other than the economists associated with the campaign) was just released by the Citizens for Tax Justice. They report that 53 percent of the income tax cuts from the plan would go to the top 1 percent, average income: $1.7 million. The middle class would get about a $1,000 tax cut, about 12 percent of the total, while the poorest fifth gets about $200, or 3 percent of the total. Note that CTJ does not include the large corporate tax cut, which would further increase the regressivity of the plan.
The bad news is that policy-focused coverage of presidential campaigns remains a specific and at times marginalized niche…in other words, the mainstream broadcast media will not be giving any of the above air time . There is not yet any hint that Bush’s economic plans —nor his dishonest sales job of those plans — should speak in a central way to how we understand his character, his judgment, his integrity, (or more importantly, the lack thereof) and his pursuit of the presidency.
Thus far this year, America’s collective journalistic juggernaut has spent a lot more time and energy on scrutinizing Clinton’s emails than on scrutinizing the content of Bush’s economic policy. And that’s a lucky thing for him, because what he’s put out there is an appalling construction of bullshit based on three claims that don’t withstand even superficial examination. The three primary tenets of his so-called “plan” are:
- Jeb Bush claims Florida during the Jeb years represents an economic policy success story that he can take nationwide.
- Jeb Bush claims his tax program is motivated by a belief in the “right to rise” and a desire to obtain social mobility for the poor.
- Jeb Bush claims his tax program will help the country achieve an average annual growth rate of 4 percent.
But before exploring the details of this, consider one small indication of Bush’s dishonesty on taxes — his plan includes a large tax cut that primarily benefits not the top 1 percent but the top 0.1 percent, and he omitted that fact during initial media push entirely.
As the richest 0.1 percent of the population obtains almost half of the capital gains income in the country, these are shifts that overwhelmingly benefit the wealthy few. And yet in a Tuesday evening Wall Street Journal op-ed laying out his tax plan, Bush simply failed to mention any changes to capital gains, dividend, or interest tax rates. Thus he generated a whole slew of day one stories that simply forgot to mention the most regressive part of the plan.
Specifically, his plan includes a cut in the top marginal tax rate for capital gains income from 23.8 percent to 20 percent. It also cuts the top marginal tax rate for dividend income by the same amount. And it cuts the top marginal tax rate for income derived from interest on bonds from 39.6 percent way down to 20 percent.
Jeb Bush’s brother, George W. Bush, was supposed to be a “compassionate conservative”. In actuality, he funneled hundreds of billions of dollars in tax cuts to the wealthiest Americans. Jeb Bush’s version of this is his alleged passion for upward “social mobility”. When he gets billionaires to write six- and seven-figure checks to finance his presidential ambitions, they are donating to a political organization named “Right to Rise”. Now the real reading of this should be “Only the Rich shall Rise”.
The second paragraph of his tax proposal describes this as the central stimulating purpose of the reform: “Restoring the right to rise in America requires accelerating growth, and that can’t be done without a complete overhaul of the U.S. tax code.”
And yet, the tax program contains the following provisions:
- A family with $500,000 in taxable wage income will get a larger tax cut than a family with $50,000 in taxable wage income. A family with $5 million will get an even bigger one.
- Heirs to multimillion-dollar fortunes will receive a large tax cut.
- A multinational company that shifts profits to foreign subsidiaries will be able to permanently avoid paying taxes on those profits
- A multination company that engaged in past profit shifting to defer paying corporate income tax will be rewarded for its bad behavior with a retroactive tax amnesty.
- A person who owns so much stock that he has maxed out his existing tax-advantaged saving accounts will get a tax cut.
None of this is shocking stuff, of course. It’s widely held Republican dogma that the executives and owners of large business enterprises and their heirs are overtaxed in the United States. But this simply underscores the fact that there is no distinguishing “right to rise” policy agenda in the Jeb Bush plan. It is, as was his brother’s and even Mitt Romney’s, founded on a belief that a big problem in the United States is that the take-home pay of the top 1 percent of the population is too low.
Bush also says we should judge the merits of his plan by looking at his record in his home state of Florida.
The truth about Florida under Bush is that his two terms in office perfectly coincided with a massive, unsustainable boom in house prices. Sounds suspiciously like the situation that George W. Bush presided over on a country-wide scale, which led to the Real Estate crash of 2007 doesn’t it?
House prices can’t just rise and rise and rise forever at that kind of clip. And when Florida’s house price boom turned bust, it took the whole economy down with it, same as his brother’s stewardship did to the United States real estate market. And Florida’s inflation-adjusted GDP has still not recovered to its bubbly peak. Bush says the success of Florida’s economy validates his policies, but Florida’s economy hasn’t been successful, so you do the math.
Then there’s the Bush 4 percent growth goal…it is an impossibly ridiculous, cruel joke.
In Jeb Bush’s version, his tax program is part of an agenda to achieve “sustained 4% economic growth.”
He offers no evidence, as is Republican habit, that growth on that scale is achievable other than to cite Florida’s rapid — and not remotely sustained or sustainable — economic growth during the bubble years.
What’s more, Bush doesn’t mention that Florida’s growth looks much less impressive when judged on a per-person basis. Florida, you see, has a population that’s been growing much faster than the overall US population.
There’s simply no way for the US as a whole to replicate the internal migration on which Florida’s 4 percent growth was based.
The origins of the 4 percent goal confirm that it’s basically nonsense:
That ambitious goal was first raised as Bush and other advisers to the George W. Bush Institute discussed a distinctive economic program the organization could promote, recalled James Glassman, then the institute’s executive director.
“Even if we don’t make 4 percent it would be nice to grow at 3 or 3.5,” said Glassman, now a visiting fellow at the American Enterprise Institute. In that conference call, “we were looking for a niche and Jeb in that very laconic way said, ‘four percent growth.’ It was obvious to everybody that this was a very good idea.”
The plan, as currently released, is not sufficiently detailed to permit credible independent scoring. But even four economists handpicked by Bush’s team to analyze it say that under standard methods it would reduce federal revenue by about $3.4 trillion over its first 10 years. That’s trillion with a T. Which is to say that if you had a stack of a billion dollars, you would need to add 3,399 more billion-dollar stacks to equal the cost of this program.
Obviously, the GOP has been very successful in the message that delivering a large tax cut to owners of corporate bonds will do more to boost social mobility than providing preschool to poor children, or that reducing the tax burden on people who inherit $10 million estates is more morally urgent than reducing global malnutrition.
But the point is simply that Bush is proposing a very significant financial commitment — one whose rollout to the public was fundamentally dishonest, featuring sins of both omission and warrant. The details and underlying rationale of this program are worthy of at least as much scrutiny as State Department email protocols, although to be fair, the protocols were changed after Ms Clinton left the State Department and multiple other Secretaries of State under GOP administrations followed the same protocols as Ms Clinton before those changes.
The precedent from the main stream media of 15 years ago is not encouraging for the upcoming election. But don’t expect to see any of that on the evening news.
Harvey A. Gold