Rave #3 - Don't hide THIS light under a Bush

Want to hear some good news for a change?

After a rant or two, I have to rave about something our nation is doing well for once!

We received optimistic news Tuesday from the Labor Department regarding the productivity of American businesses and their workers. Originally forcast to rise by 4.1% this year, the forcast has been revised to 4.7%. Additionally, labor costs actually decreased last quarter, easing pressures on businesses to keep wages flat.

Some examples pulled from the news till:

• National grocer Kroger Foods, reported that it's 3rd quarter results showed a 30% gain in sales over last year
• Factory orders rose by 2.2% in October, as expected, and strong, considering the impact of the Hurricane disasters upon the Gulf region.
• The government reported that 215,000 jobs were added to the payrolls in November, following a "disappointing" October (56,000 jobs despite Hurricanes Katrina and Rita).
• Reuters survey 37 analysts after the hurricanes and determined that between 25,000 to as many as 400,000 jobs would be lost due to the impact upon infrastructure and employment, as well as costs to local governments. Contrary to predictions, the losses amounted to less than129,000 - only the first negative movement since 2003. The GDP, however continued to grow that quarter, in excess of 3%.

As energy prices continue to correct their inflated prices (as expected in our resilient open-market), consumer concerns about hard costs have begun to subside, and they are beginning to spend money again. Good news!

Bad news? Well leave it to the....

For the last year we have had the media pressing this matra into our minds: the economy is struggling while the government is running up unprecedented tabs on our future with record deficits. People are making less, more are losing their jobs!

Hogwash! I say...

Since Bush enacted strategic tax cuts...

• Corporate profits have leaped to all time highs, benefiting over 50 million shareholders across the nation.
• Real GDP has grown by at least 3% for the last 10 quarters dating back to 2003.
• Existing home sales are hitting records across the nation (despite reports that the market is correcting itself), including Wisconsin, where gains amounted to more that 9%.
• The unemployement rate is 5.1 %, lower than the yearly average during the 1970's, 80's and even the "booming" Clinton tenure.

People are making more money than ever before, and the only thing that liberal economists can do is point to meaningless numbers that would have mattered only in another economic era (certain deficit numbers, minimum wages and isolated economic dynamics). Now, technology determines productivity, and education dictates wages. Their math models are so old that there are some doom-sayers that claim the economy is worsening when, in fact, it is only getting stronger. (The one exception I agree with the left on is that our education system is cracked and bleeding and needs to find more efficiency and access to blighted areas)

Back to the economic debate... How many times have you heard in Mass Media (MM) that the Bush administration has taken a budget surplus from the Clinton years and turned it into record deficits? Constantly? Sure, and yet they not only ignore, but they knowingly distort the truth about the Clinton Presidency vs. the Bush Presidency.

The GDP posted gains in Clinton's first month of office, topping $6 billion for the first time
During Clinton's tenure, beginning in 1992, he inherited an economy that was already recovering from a brief cyclical recession; imagine who got the credit in the MM.

What many like to do is paint this beautiful picture of the Clinton years:
When President Clinton entered office, he took hold of the souring economy, tightened the government belt and created the best economy this nation had seen since WW2. 13 million jobs were added to the nation payrolls and average incomes per household increased significantly.

What many don't see are the actual figures behind the gloss. Despite running federal surpluses (which were simply "bonuses" the goverment subsequently spent), the federal deficit continued to rise. (As did personal credit, which had more to do with the expansion than did normal dynamics like wages and inflation) Unforunately, the 1994 victory for the Republican Congress couldn't halt the government spending that ensued.

However... Strengthened by the biggest tax increases in American history, the tax rolls continued to rake in the cash. Increasing technology and record productivity gains (as well as some irrational stock market performance) countered the negative impact of tax increases on American businesses and the wealthy class. Result? Record tax income, historically low unemployment and federal surpluses for the first time since the 60's. And what did the Administration do with the surpluses (which didn't even appear until Clinton's 6th year)? Pay down the nation's debt you wonder? Lower taxes? NO! The national debt continued to rise by 48%! Between 1992 and 2000, the national debt rose from $3.8 billion under Bush I, to $5.7 billion by the time Clinton left office.

Ironically, the very month Clinton left office, the economy showed signs of weakening
Within one year the over-heated, unattended tech market turned south, as many had warned, taking people's job, wages, retirement and collateral with them; the 2000-01 stock market crash had liquidated some $6 trillion in American household wealth. And this is important, because the nature of our budget surpluses the last two years of Clinton's presidency were not due to restricted and wise government spending, but rather tax revenues generated off the "froth" of an unrealistic trading market.

When that $6 trillion vanished, so did the tax revenues that Clinton took credit for.
The recession that ensued was quickly blamed on Bush; amazing, since he had not enacted one single piece of economic policy between his taking office and the first job losses of the tech industry.

So the new President did what many had been crying for years to be done:

• He lowered taxes by nearly half for the top bracket, and simultaneously lifted the number of people not paying taxes by over 1 million.
• Cut the 28, 31, and 36 percent rates fall by 3 percentage points, while the 39.6 percent rate fell to 35 percent. A new 10 percent tax bracket replaced the 15 percent bracket.
• The Bush economic plan reduced tax rates on dividends from 39.6 percent to 15 percent and on capital gains from 20 percent to 15 percent.
• Enacting policies aimed at cracking down on corporate abuse and feeding cash back into the wage-starved economy, Bush took the unpopular stance of financing economic growth on the tab of the government.
• He also expanded the child credit and the Earned Income Tax Credit (EITC).
• Reduced marriage penalties, increased subsides for education and retirement saving, repealed the limitations on itemized deductions and phaseouts of personal exemptions, and provided temporary, limited relief from the alternative minimum tax (AMT), a complex law that was designed to prevent aggressive tax sheltering but primarily affects large, poorer families or residents of states with high income taxes.

American's response? Spend it. Result? Economic expansion, higher wages and better jobs.

The Federal government was seeing tax revenues rise once again. Deficits have continued, however despite a $200 billion war, the Federal coffers have begun to see the light of day in terms of surpluses. Originally, the government reported that 2005 would see a deficit of well over $450 billion. However, new IRS procedures on collection and increasing corporate profits pumped new cash into the tax stream. In the fiscal year 2005, the projected deficit is $307 billion, which is nearly $100 billion less than 2004, and this was accomplished without raising taxes, and in fact, cutting them significantly!

Bush's cuts -- highlighted by a drop in tax rates on dividends and capital gains -- have been followed by:

• A $187 billion rise in federal tax revenues in the first eight months of the last fiscal year alone.
• That represents a 15.4 percent gain in federal tax receipts over 2004.
• Individual and corporate income tax receipts are up 40 percent in the 2 1/2 years since the tax cut.
• The Dow is up 24 percent since May 2003 while the Nasdaq has risen 39 percent, adding roughly $3 trillion to the wealth holdings of American households.

And not just federal government receipts are benifiting from all the freed up cash. So are local and state governments. State tax receipts already have climbed 7.5 percent this year. New York City, which long has suffered from debt, suddenly has a surplus of more than $3 billion.

And you know what the Democrats are saying about this?

• Rep. John M. Spratt Jr. (D-S.C.), ranking minority member of the House Budget Committee said in October "the final figure (Budget Deficit) this year was $588 billion worse than the Bush administration projected when it sent up its first budget in 2001."
• Karen Finney, Communications Director of the Democratic National Committee (DNC) said this week, "While President Bush praises his own economic record, he fails to mention that he squandered a huge surplus and has presided over the worst deficits in our nation's history."
• Democratic House Leader, Nancy Pelosi had this to say about Bush's economic policy, "The federal budget should be a statement of our national values. Instead, Republicans have proposed a budget that is an excuse to give tax cuts to their special interest cronies, while increasing the deficit..."

So Bush lied to us again?! No, we can easily see how twisted this logic is. First of all, the entire Congress and Bush Administration looked at the numbers coming from the Congressional Budget Office (CBO) and the consensus (on BOTH sides of the aisle) was that a tax cut was in order. The tax cuts passed overwhelmingly, including the support of many Democrats. What no one foresaw was the collapse of the revenue base that was used to support the tax cuts.

Today, we live in an age of one of the best economies America has ever seen. Not everyone feels the immediate benefits of the Bush economy, but they will. Nonetheless, the unemployment rate is at a historical low, wages are rising (and will continue as corporate profits make wage increases easier to manage), good rental housing has become more affordable (as well as home loans), millions of jobs await skilled workers to fill them and productivity has made our nation the hardest working nation on earth.

Hold the truth up for the whole world to see: tax cuts work. Period.