WASHINGTON — Once upon a time, taxes were higher and unemployment was lower. People prospered. The federal treasury overflowed. The deficit disappeared.
Perhaps Americans have forgotten that era since it was so long ago — the Clinton years. Way back in the mid-1990s, the national jobless rate hovered around five percent. By 1999, only 4.2 percent of Americans were without jobs — a rate so low that economists have traditionally considered it to represent “full employment.” (That means that every working-age American who wants a job has one.)
C’mon. Have we really forgotten that period of broad prosperity? Are our memories so short? Were you forced into penury by the federal taxes you paid during the 1990s? I ask because leading and lesser Republicans continue to insist that the economy would grow, jobs would flourish and rivers would flow with honey if only there were a president willing to slash taxes. Excuse me? Didn’t we have a president who did that? Isn’t that how we piled up massive deficits?
Psychologists tell us that it’s a lot easier for human beings to believe things we want to believe — premises that buttress our of ourselves as smart, hardworking and self-reliant; ideas that present us with pleasant options; notions that confirm our prejudices. I get that. I know that taxes are hard to love, and it’s tempting to believe that lower taxes are necessary to turn the economy around.
But it’s simply not true — as recent history has shown us. (Actually, most Americans are a bit ahead of their politicians on this. Polls show most voters support raising taxes on the rich.) The last two decades have given us a real-time experiment which most of us are old enough to remember: President Clinton versus President Bush. Clinton raised taxes to combat the deficit. The economy took off, money piled up in the treasury and, by the end of his term, Clinton had compiled a federal surplus and was ready to start paying off the debt.
Now, let’s look at Bush’s record. He pushed through tax increases that gave a lopsided benefit to the wealthiest Americans. Did captains of industry take those proceeds and start creating jobs? Ah, no. Economists have referred to that period as a “lost decade” because there was no net jobs growth — as many jobs were lost as were created — from 2000 to 2009.
Now, there are lots of caveats in both pictures. For one thing, it’s easy to look back and see that the Clinton years were enriched by the start of the real estate bubble, a flimsy foundation which could not have sustained the middle-class. Indeed, when that bubble burst toward the end of Bush’s second term, it left the economy a smoldering ruin.
It’s also worthwhile to take a look at a tax code so riddled with loopholes, exemptions and special allowances that several giant corporations pay their CEOs more than they pay into the federal treasury, according to a new report by the Institute for Policy Studies. Perhaps the country would be more competitive with thoughtful revisions to the tax code.
There are many sane policy options to contemplate, and lots of legitimate political disagreements would follow. But there is no place in a modern society for an ideology that dismisses facts, ignores data and announces nonsense as wisdom. Yet, the cut-taxes-grow-jobs platform — voodoo economics on steroids — is the economic platform of the modern Republican Party.
Actually, it’s worse than that. Nearly a century after the adoption of the federal income tax — with its premise that the wealthy should pay more — some Republicans have decided to reverse that idea. They want to raise taxes on the poor and the working classes.
There are lots of things wrong with the country, but a tax code that overburdens the virtuous affluent is simply not one of them. Apparently, the campaign season will be a journey through the rabbit hole with GOP candidates who have fled the reality-based universe.
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