U.S. revenues went from $1.88 trillion to $2.57 trillion under Bush 43

To The Daily Sun,

The other day, Henry Osmer somewhat gloatingly stated that the Bush tax cuts cost the country $1.8 trillion in lost revenues. Of course he had put together his letter in order to defend the indefensible . . . that is, Professor Maloof and the current administration . . . and that gross number was used for its shock value.

In researching Mr. Osmer's $1.8 trillion reference, I found that it was based on a set of assumptions, mainly that there would be virtually no difference in tax receipts if taxes were lowered or increased. However, that assumption is in direct contradiction to what has become known as the Laffer Curve, which states that no change in tax revenues occurs only at the extreme ends . . . either at a zero tax rate or at a 100 percent tax rate. Further, as tax rates are raised or lowered, there is a point where the tax rate is optimum to achieve maximum revenues. As the following paragraphs will show, tax revenues increased as the Bush tax cuts took effect, so it is a reasonable assumption that Laffer's theory is more plausible than the one cited by Mr. Osmer. What follows is a little historical perspective on the issue.

Just prior to President Bush taking office in January 2001, the "Dot Com" (Internet growth) bubble burst. It had a devastating impact on the economy as a number of major companies had continued to build the products to accommodate the Internet's high rate of growth, when in a flash, the demand for those products virtually ceased. Also in 2001, the country was shaken by the 9-11 attacks, which also devastated the economy. Total annual tax revenues which were $2.03 trillion in 2000, dropped down to $1.78 trillion by 2003.

The so-called Bush tax cuts that were passed in 2002 gradually began to turn around that downward trend, and in 2004, there was a slight upturn as revenues reached $1.88 trillion. From that point on, for 50 straight months, the economy grew. In 2007, revenues reached a high of $2.57 trillion. In 2008, when the housing bubble burst, incoming revenues dropped to $2.52.

When President Obama took office in 2009, revenues dropped to $2.1 trillion but then grew each of the following years, with 2013 reaching a high of $2.78 trillion. It should be noted that in 2012, Congress and the president let the Bush tax cuts expire but, on the very next day, they passed and signed into law most of those same broad-based tax cuts . . . while inflicting some tax pain on high income earners and on those who were receiving income from dividends and capital gains. They also re-instated the "death tax" but raised the threshold before that tax could be imposed. (Mr. Osmer might ask himself, if the Bush tax cuts were "bad," why did President Obama re-instate the majority of them?)

During his tenure, in addition to his tax reduction policies to stimulate growth, President Bush instituted a number of spending measures in an effort to stimulate the economy. During his eight years in office, his average deficit spending per year amounted to $313.9 billion. President Obama also instituted a number of spending programs. During his first five years in office he has averaged deficit spending of $1.155 trillion per year.

The country does not have a revenue problem. It has a spending problem. We cannot continue to spend over 40 percent more than we take in. We have an out-of-control government that, in the pretense of doing good for the people, is steadily burdening them with so much debt, that it will ultimately make them servants of the government. The road we're on will change our political system from what has been a government of, by, and for the people, to, sadly, a government that diminishes our freedoms and invites tyranny.

Bob Meade

Laconia