Catastrophe - Dick Morris [15]
One-shot tax refunds are as useless as one-shot spending increases. But permanent tax cuts, which can encourage long-term growth, send a real message to rational people that better times are coming.
Anxious to use the crisis as a pretext to expand government, Obama criticized the idea of permanent tax cuts, particularly for the wealthy, saying that it was just this sort of policy that got us into the current mess. He was determined, he insisted, to break with the “failed approaches” of the past.
But it wasn’t George W. Bush’s tax cut that caused the recession. His tax cuts pulled us out of the recession of 2001–2002, which hit us right after Osama bin Laden flew a plane into the global economy and knocked it down. Largely because of these tax cuts, the economy grew for five years.
The Bush tax cuts didn’t cause the budget deficits of the first decade of this century either. Even though Bush cut taxes for the rich (the top 10 percent of earners), their share of total tax payments rose from 64.89 percent in 2001 to 70.79 percent in 2006.49 In total, the richest 1 percent of the nation actually paid more money overall because of Bush’s policies—an amount rising from $301 billion a year in 2001 to $408 billion in 2006.50 In fact, it’s precisely because the drop in tax rates stimulated the economy that the lower rates brought in more revenue than the higher ones had.
But Obama wouldn’t let all those inconvenient facts get in the way. He wasn’t about to give up his big chance to use the crisis as an excuse to grow the government. And he certainly wasn’t about to use it to shrink it!
OBAMA TRASH-TALKS THE ECONOMY
Even with top-heavy majorities in both houses of Congress, Obama couldn’t be absolutely certain that he’d manage to get his big spending legislation passed. In the House, of course, he could do whatever he wanted: His majority there would pass anything, and the House Republicans—the best-dressed hostages in the world—could only sit back and watch the legislation sail through.
But the Senate was a different story. There, too, he had an ample majority, but there were still forty-one Republicans that stood in his way. To bring his proposals to a vote, he needed sixty senators—and that means he couldn’t do it with Democrats alone.
So Obama needed to heat up the sense of crisis. He had to make his stimulus program a do-or-die proposition. “Pass this plan or you’ll plunge us into the abyss” became the administration’s daily message. In one speech, Obama used the word “crisis” more than twenty times. Intent on raising the level of anxiety for political purposes, he was seemingly oblivious to the effect his words were having on the economy. What little consumer spending that survived the crash of the last quarter of 2008 dried up; business pulled in its horns.
The president said the sky was falling, so everybody looked up.
Here’s a sample of the language Obama has used to describe the economic crisis to the American people—language that has only increased our collective sense of fear and deepened the recession.
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HOW OBAMA DEEPENED THE RECESSION…WITH HIS SPEECHES
“We are in the worst financial crisis since the Great Depression, and a lot of you, I think, are worried about your jobs, your pensions, your retirement accounts.”51
—October 7, 2008
“But I think what unifies this group is a recognition that we are experiencing an unprecedented, perhaps, economic crisis that has to be dealt with, and dealt with rapidly.”52
—January 23, 2009
“I want to say