A few days ago, I had the pleasure of seeing the movie "Time Bandits" again. During the movie, the devil says to one of his group, "You are so mercifully free from the ravages of intelligence." The same could be said of Bush. His complete cluelessness is absolutely amazing. Yesterday, he gave a
speech promoting the extension of tax cuts. The speech is full of a large number of half-truths and lies. Below, I will point them out.
This economy of ours is hitting full stride. In the first quarter of this year, our economy grew at an annual rate of 4.8 percent. This follows a vigorous 2005, when the American economy grew at 3.5 percent. The past two-and-a-half years, we've added more than 5.2 million new jobs. Productivity over the last five years has grown at the fastest rate in decades. Higher productivity leads to higher wages for the American workers. Hourly compensation grew at an annual rate of 5.7 percent in the first quarter of this year. American workers are taking home bigger paychecks and their standard of living is on the rise. The American economy is powerful, productive, and prosperous, and we're going to keep it that way. (Applause.)
The past two-and-a-half years, we've added more than 5.2 million new jobs.
First, this is a fact. According to he Bureau of Labor Statistics, there were 129,852,000 establishment jobs in April 2003 and 135,068,000 establishment jobs in April 2006 for an increase of roughly 5.2 million. But, as usual Bush has decided to use a benchmark that makes his record seem impressive. 2003 was the absolute nadir in terms of job creation for his administration. According to the National Bureau of Economic Research, this expansion started in November 2001, when there were 130,883,000 establishment jobs. This makes the total number of jobs created 4.1 million - a full 1 million less than his claims. In addition, the compound annual growth rate in establishment jobs for this expansion is .7, by far the lowest rate of the last 40 years. The second lowest compound annual growth rate in jobs occurred during the 1990s and that was 1.8% or twice the rate of creation of the Bush economic miracle.
Hourly compensation grew at an annual rate of 5.7 percent in the first quarter of this year.
According to the Bureau of labor Statistics, the average hourly wage of non-production workers was $16.40 in January 2006 and $16.52 in March 2006 for an increase of .73%. Over the same period, the inflation measure increased from 198.3 to 199.8 for an increase of .75%. This means the average hourly compensation of non-supervisory workers decreased .02% over the first quarter of 2006.
American workers are taking home bigger paychecks and their standard of living is on the rise.
Here Bush is using a classic Right Wing Noise machine trick. He is using the disposable income figure from the quarterly GDP release. The problem with this number is it is a macro-number, including all incomes in the US. As mentioned above, 80% of the population saw a decrease in their take-home hourly earnings over that period. Therefore, the upper 20% of income earners are skewing this figure higher. As explained below, the huge tax break that went to the top 20% of income earners from the capital gains and dividend tax cuts has increased their income
The cuts on dividends and capital gains are reaching families and businesses alike. About half the households in America, 57 million in all, have some investment in the stock market. And they either own shares in individual companies or through mutual funds. Sometimes, they own these shares through their retirement plans. By cutting the taxes on dividends and capital gains, we helped add about $4 trillion in new wealth to the stock market.
According to the Tax Policy Center 74.5% of dividends that qualify for the tax break and 93.3% of the capital gains that qualify for the tax break are for the top quintile of income earners. 88% of the benefits of taxing dividends and capital gains go to the top 20% of income earners. When Bush is talking about people having 401(k) and IRA money that benefits, he forgets a very important point: those are tax deferred growth plans. People with those plans don't pay taxes until the plan holder withdraws the funds.
Part of our strategy to cut our deficit in half is to continue to grow this economy. Tax relief has helped a growing economy, which means more tax revenue for the federal treasury. 2005 tax revenues grew by $274 billion, an increase of nearly 15 percent over the previous year. This year the economy is still growing, and tax revenues are growing with it. So far, tax revenues are 11 percent higher than they were at the same point last year, which is better than projected. More than a quarter of these tax revenues come from corporations who pay more because they're growing with the economy.
Bush completely ignores the revenue effects of the 2001 tax cuts. According to the Congressional Budget Office, For each year from 2001, revenue from individual taxpayers was (in billions) $994, $858, $793, $809 and $927, respectively. In other words, Bush is completely ignoring the decline in revenues that resulted from his 2001 tax cuts. And tax revenue is still barely above the level when he took office in 2001.
By growing this economy, we're staying on track to meet our goal of cutting the deficit in half by 2009. But to meet that goal, we must be strong on controlling the federal appetite for spending. Every year since I took office, we've slowed the growth of discretionary spending that's not related to the military or homeland security. My last two budgets have actually cut this kind of spending.
Counting the Bush war machine (you remember Iraq, don't you) total spending increased from $649 billion to $967 billion. This has caused the US Federal government increased it's total debt outstanding from 5.8 trillion to 8.3 trillion. This is probably why that bastion of liberal thought the Cato Institute called Bush the Biggest spender since LBJ.
So, when the White House talks about the economy and their "achievements", we know their tricks. They will use 2003 as the starting point for job creation. They will use 2004 as the starting point for tax revenue. And they will use non-defense discretionary spending for their fiscal expenditures.
In other words, they will only use the figures that make them look good. This is similar to not counting a really bad outing for a pitcher when computing his era. "Got rocked for 10 runs? Forget about it.