Report: Bush Tax Cuts Gutted Americans' Incomes 6.6 Trillion Dollars

[dawg]

33. Correlation does not equal causation.

It is undoubtedly true that middle-class incomes have declined since 2000. It is also true that the Bush tax cuts were sold to the American people based on ridiculous assumptions about the growth they would supposedly spark.

But nowhere in that data is there any proof that the cuts were the actual *cause* of the drop in incomes.

The tax cuts were a huge waste of money. They increased the deficit. They failed to provide any significant stimulus to an ailing economy. But they were not the underlying cause of the income decline.

So what do I think caused the decline in incomes? A number of factors, most of which are the fault of conservatives.

Globalization and outsourcing is a huge factor. As multinationals move jobs to low-wage countries, the remaining American workers must compete for the remaining onshore jobs, putting downward pressure on wages. Likewise, many of the jobs lost were manufacturing jobs that paid higher wages than the service industry and retail jobs people were forced to take in their stead. NAFTA and other "free" trade agreements accelerated this problem.

Allowing companies special visas to hire low cost foreign workers in technology and other industries also helped push worker incomes down.

Mergers and consolidations allowed corporations to cut "redundant" jobs, making them leaner and meaner. The Bush administration never saw a merger they did not like. There was a real perception in the business community that anything goes and that anti-trust laws would not be enforced.

The continued decimation of labor unions has weakened worker bargaining positions and lead to lower wages and benefits. The Bush administration was actively hostile to labor unions, and conservatives around the country have been successful in bringing "Right to Work (for less)" laws into effect in their states.

There were even some factors leading to the decline in wages that were *not* specifically the fault of conservatives, although they certainly didn't do anything to mitigate them. Technological advances have made it possible for many positions to be eliminated, or combined with other positions, exerting even more downward pressure on wages. One could argue that this could potentially be a good thing, but with no one looking after the interests of workers, all of the benefits of these technological advances have gone to the owners of capital. Instead of making workers' jobs easier and more rewarding, technological changes have just allowed corporations to hire fewer people.

The stock market crashes in 2000 and 2008, as well as the housing market crash mid-decade, led to major negative wealth-effects, lowering demand and slowing the economy. The capital end of the economy was bailed out at government expense while the labor end was largely allowed to twist in the wind. People who still had jobs knew they were lucky, and were too terrified to make any demands for additional salary.

I could go on a great deal longer listing all the different variables that contributed to the decline in middle-class incomes that we experienced last decade. But that's beside the point. The tax cuts were bad policy. They were sold to us on the basis of fairy tales. But we are telling a fairy tale of our own if we try to blame these tax cuts for all of our woes.

Correlation does not equal causation.