Holy chart toppers, Batman! I mean Habib. That's some serious analysis.

 

Sorry, if your previous response answers these specifics. I will confess to being dense regarding economic theory but I do want you to know I am not being deliberately obtuse. The reason I quoted an expert in my first post is because I am fully cognizant of my "deficit" in this area.

 

:lol2: I'm not an economist either, but it was interesting to look into the numbers a little more on a lazy Sunday evening and I learned some things in the process.

 

Tell me about the two points that Sowell made. 1) that tax revenues went up after the Bush tax cuts. One would expect some lag as the effect on the economy would not be immediate. But Sowell claims the two sources he cited indicate revenues went up. Is it really because, as you say, the economy would grow any way without the tax cuts and so revenues would eventually be higher than the pre-tax cut years?

 

From my read of it both GDP and government receipts increase fairly steadily year to year. This makes sense. We consider it a recession if GDP doesn't go up for half a year and if GDP is going up then the government is going to nominally take in more money. The first two charts were meant to show that it is very unusual for GDP or revenue to go down from year to year (I used the numbers from the "Economic Report of the President" Sowell cited to make the charts).

 

So, I would expect this to still be true whether Bush signed any tax cuts or not. The question is then "Would the government have taken in more revenue without the tax cuts?" I don't see any evidence that it wouldn't have since receipts dropped and the deficit doubled in the two to three years after the cuts.

 

2) the Budget Deficit declined year after year following the tax cuts. This is in contradiction to the claim by others that the deficit increased, in this case the claim was made by President Obama.

 

Sowell cites two very different sources for his information, "Economic Report of the President" and "Investor's Business Daily." He says this deficit reduction continued until the mortgage crisis caused an increase in the budget deficit.

 

So, is Sowell correct in saying that the Budget Deficit reduced after the Bush tax cuts? If so, would Obama be wrong about the Budget Deficit increasing due to the Bush tax cuts. They both can't be right. They may both be wrong. Or one may be right, unless there is some other way to understand what they are saying.

 

I did not consult the IBD article. I looked at the "Economic Report of the President" since this is effectively the official "box score" of historic economic indicators. Sowell cited the page containing a table of year to year receipts and outlays so that's what I went with.

 

As to who would be correct, my answer is "it depends." I imagine that both men are using a bit of rhetorical sleight of hand. It's true that each year's budget deficit was slowly reduced during Bush's second term, according the figures in the report, but it's also true that the budget went from a net surplus of $128.2B to a net deficit of $412.7B during his first four years.

 

Sowell is starting at the $412.7B deficit and pointing to reductions thereafter until 2007 (the deficit shot back up to $458.6 in 2008, but I attribute part of that to the financial collapse) and I imagine Obama is starting at the $128.2B surplus and noting that Bush oversaw deficits for every year of his presidency thereafter.

 

So, Bush both oversaw a big increase in deficits and oversaw a decrease in deficits afterwards. Depending on your point of view that either means Bush inherited lemons and tried to make lemonade or Bush keyed the car and then tried to buff it out. But from my view the numbers seem to show his tax cuts interrupting what would otherwise be a period of increasing revenue.

 

Lastly, Sowell concludes that one result of the tax cuts is that "the rich” paid a larger amount of taxes, and a larger share of all taxes, after the tax rates were cut. The Bush tax cuts are usually characterized as having the opposite result.

 

I'm not sure where he came up with this. That's not to say it's wrong, just that I don't know what he's referring to so that I can look at it.

:lol2: I'm not an economist either, but it was interesting to look into the numbers a little more on a lazy Sunday evening and I learned some things in the process.

 

Really?! That's what you do on a lazy Sunday evening? I figured you just pull out a guitar, play a few Rolling Stones tunes, and have a smoke. I don't know where i got that idea...