Paul Krugman, The New York Times, September 10, 2007
Four years ago the Bush administration, exploiting the political bounce it got from the illusion of success in Iraq, pushed a cut in capital-gains and dividend taxes through Congress. It was an extremely elitist tax cut even by Bush-era standards: the nonpartisan Tax Policy Center says that more than half of the tax breaks went to Americans with incomes of more than $1 million a year.
Needless to say, administration economists produced various misleading statistics designed to convey the opposite impression, that the tax cut mainly went to ordinary, middle-class Americans. But they also insisted that the benefits of the tax cut would trickle down – that lower tax rates on the rich would do great things for the economy, helping everyone.
Well, Friday’s dismal jobs report showed that the Bush boom, such as it was, has run its course. And working Americans have a right to ask, “Where’s my trickle?”
It’s true, as the Bushies never tire of reminding us, that the U.S. economy has added eight million jobs since that 2003 tax cut. That sounds impressive, unless you happen to know that a good part of that gain was simply a recovery from large job losses earlier in the administration’s tenure – and that the United States added no fewer than 21 million jobs after Bill Clinton raised taxes on the rich, a move that had conservative pundits predicting economic disaster.
What’s really remarkable, however, is that four years of economic growth have produced essentially no gains for ordinary American workers.
Wages, adjusted for inflation, have stagnated: the real hourly earnings of nonsupervisory workers, the most widely used measure of how typical workers are faring, were no higher in July 2007 than they were in July 2003.
Krugman is under-playing the state the economy is in.
The American worker has taken it in the shorts since 1980.
Comment by Buzzcook — September 11, 2007 @ 12:35 pm