Job growth and tax cuts under Obama, and the inability to acknowledge either

    I’m curious to know if there’s anyone out there who doesn’t buy this, and, if so, why not. My sense is that some will say it’s unfair to lay the massive job losses that began in January 2007 at the feet of Bush, pointing to the fact that Congress was in the hands of the Democrats the last two years of his eight year term. But I don’t seem to recall anything that Congress did without his approval during those years that might have caused this to happen. They did, during that time, stop Bush from privatizing Social Security, but I don’t see how that could have led to millions of people losing their jobs. On the other side of the equation, though, I don’t know how much Bush was responsible, as most of those jobs were lost in the wake of the subprime mortgage crisis that brought our economy to the brink of collapse. Sure, you could argue that there was lax oversight, and that, if not for the push for increased deregulation, it wouldn’t have happened, but the blame for that, it seems to me, is pretty evenly shared across the political spectrum, and goes all the way back to Reagan. The important thing, from my perspective, isn’t who dug the hole, but that Obama, with no support from the Republicans, got us out of it. And I’m curious as to how anyone could look at these numbers and dispute the fact that he’s done a decent job. Yes, there’s still a long way to go, and the meager gains we’ve experienced these past few months don’t come close to offsetting the years of massive layoffs, but things are finally trending toward the positive.

    But, facts don’t seem to carry the same weight they once did. I was just reading that, despite the fact that Obama cut federal taxes on over 95% of Americans, few acknowledge it. In fact, a significant number of Americans seem to think that he’s raised taxes significantly. Here, with more on that, is a clip from today’s New York Times:

    …In a troubling sign for Democrats as they head into the midterm elections, their signature tax cut of the past two years, which decreased income taxes by up to $400 a year for individuals and $800 for married couples, has gone largely unnoticed.

    In a New York Times/CBS News Poll last month, fewer than one in 10 respondents knew that the Obama administration had lowered taxes for most Americans. Half of those polled said they thought that their taxes had stayed the same, a third thought that their taxes had gone up, and about a tenth said they did not know. As Thom Tillis, a Republican state representative, put it as the dinner wound down here, “This was the tax cut that fell in the woods — nobody heard it.”

    Actually, the tax cut was, by design, hard to notice. Faced with evidence that people were more likely to save than spend the tax rebate checks they received during the Bush administration, the Obama administration decided to take a different tack: it arranged for less tax money to be withheld from people’s paychecks.

    They reasoned that people would be more likely to spend a small, recurring extra bit of money that they might not even notice, and that the quicker the money was spent, the faster it would cycle through the economy.

    Economists are still measuring how stimulative the tax cut was. But the hard-to-notice part has succeeded wildly. In a recent interview, President Obama said that structuring the tax cuts so that a little more money showed up regularly in people’s paychecks “was the right thing to do economically, but politically it meant that nobody knew that they were getting a tax cut”…

    I’d like to attribute to stupidity the fact that people don’t realize that their federal taxes went down under Obama, but, as the author of this piece noted, the cuts were somewhat hidden by design. And, on top of that, it didn’t help that 30 states took the opportunity, during that same period of time, to raise their taxes, effectively canceling out the federal cuts.

    And, while we’re on the subject of woefully incorrect beliefs held by the American electorate, I thought that I’d also share this clip from an article by Bruce Bartlett on the results of a small, informal poll of Tea Party enthusiasts.

    change-obama…Tuesday’s tea party crowd, however, thought that federal taxes were almost three times higher than they actually are. The average response was 42% of GDP and the median was 40%. The highest figure recorded in all of American history was half those figures: 20.9% at the peak of World War II in 1944.

    To follow up, tea partiers were asked how much they think a typical family making $50,000 per year pays in federal income taxes. The average response was $12,710 and the median was $10,000. In percentage terms, this means a tax burden of between 20% and 25% of income.

    Of course, it’s hard to know what any particular individual or family pays in taxes, but according to the IRS tax tables, a single person with $50,000 in taxable income last year would owe $8,694 in federal income taxes, and a married couple filing jointly would owe $6,669.

    But these numbers are high because to have a taxable income of $50,000, one’s gross income would be higher by at least the personal exemption, which is $3,650, and the standard deduction, which is $5,700 for single people and $11,400 for married couples. Owning a home or having children would reduce one’s tax burden further.

    According to calculations by the Joint Committee on Taxation, a congressional committee, tax filers with adjusted gross incomes between $40,000 and $50,000 have an average federal income tax burden of just 1.7%. Those with adjusted gross incomes between $50,000 and $75,000 have an average burden of 4.2%.

    Even though the tea partiers were specifically asked about federal income taxes, it’s possible that they were thinking about other federal taxes as well, such as payroll and excise taxes. According to the JCT, when all federal taxes are included, those earning between $40,000 and $50,000 have an average tax rate of 12.3%, and those earning between $50,000 and $75,000 pay a rate of 14.5%.

    In short, no matter how one slices the data, the tea party crowd appear to believe that federal taxes are considerably higher than they actually are, whether referring to total taxes as a share of GDP or in terms of the taxes paid by a typical family.

    Tea party goers also seem to have a very distorted view of the direction of federal taxes. They were asked whether they are higher, lower or the same as when Barack Obama was inaugurated last year. More than two-thirds thought that taxes are higher today and only 4% thought they were lower; the rest said they are the same.

    As noted earlier, federal taxes are very considerably lower by every measure since Obama became president. And given the economic circumstances, it’s hard to imagine that a tax increase would have been enacted last year. In fact, 40% of Obama’s stimulus package involved tax cuts. These include the Making Work Pay Credit, which reduces federal taxes for all taxpayers with incomes below $75,000 by between $400 and $800.

    According to the JCT, last year’s $787 billion stimulus bill, enacted with no Republican support, reduced federal taxes by almost $100 billion in 2009 and another $222 billion this year. The Tax Policy Center, a private research group, estimates that close to 90% of all taxpayers got a tax cut last year and almost 100% of those in the $50,000 income range. For those making between $40,000 and $50,000, the average tax cut was $472; for those making between $50,000 and $75,000, the tax cut averaged $522. No taxpayer anywhere in the country had his or her taxes increased as a consequence of Obama’s policies….

    And these people vote…. So, yeah, I guess what I’m trying to say is that we’re kind of fucked… Thanks, FOX News for obliterating the concept of reality.

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      22 Comments

      1. Knox
        Posted October 20, 2010 at 5:47 am | Permalink

        I believe it was Tip O’Neil who coined the phrase, “You’re entitled to your own opinion, but not your own facts.” The evidence would appear to indicate that the further right you go on the political spectrum you go, the less aware one is is of the facts. That’s very telling.

      2. Edward
        Posted October 20, 2010 at 8:06 am | Permalink

        Let’s not forget, a huge number of people also believe that he’s a Muslim born in Kenya.

        It’s not just Fox News that’s responsible for all this. It’s mainstream media as well. They don’t do nearly enough to repudiate the Republican narrative and call them on it.

      3. MTD
        Posted October 20, 2010 at 8:20 am | Permalink

        The name Goolsbee scares me.

      4. Alice
        Posted October 20, 2010 at 9:55 am | Permalink

        And TARP is actually showing an 8.2% profit. We’re making money.

        http://www.bloomberg.com/news/2010-10-20/bailout-of-wall-street-returns-8-2-profit-to-taxpayers-beating-treasuries.html

      5. Alice
        Posted October 20, 2010 at 10:02 am | Permalink

        And while we’re talking about fantasy land, did you notice that, with one exception, every Republican running for Senate is of the opinion that global warming isn’t real?

        http://www.nytimes.com/2010/10/18/opinion/18mon1.html?_r=1&spoon!

        We will be the generation that signs the death penalty for the planet.

      6. Posted October 20, 2010 at 10:12 am | Permalink

        To bad we have to credit G W Bush with TARP.

      7. Fox News
        Posted October 20, 2010 at 11:26 am | Permalink

        You’re welcome.

      8. Robert
        Posted October 20, 2010 at 11:36 am | Permalink

        I don’t understand what he’s drawn on the erase board. Where are the swastikas?

      9. dan gillotte
        Posted October 21, 2010 at 12:54 am | Permalink

        I like that White board thing. I did some more investigating n the White House web-site and really liked a lot of what I saw… videos of that Austan Goolsbee (who I actually kind of like…), another good white board about the tax cuts, and a bunch of good blogs and videos. BUT, I NEVER see these items being linked to on Facebook or oiher blogs. Do people not know that these things exist? Or do they not care? Or what?

      10. Knox
        Posted October 21, 2010 at 6:06 am | Permalink

        Maybe if he had the passion that Beck has when he assaults his chalk board, he’d be more popular. Plus, I think a chalk board is less elitist than a white board.

      11. ytown
        Posted October 21, 2010 at 11:42 am | Permalink

        Thank goodness you have Fox news to blame, otherwse you might have to look in the miror.

      12. Posted October 21, 2010 at 11:56 am | Permalink

        For what?

      13. ytown
        Posted October 21, 2010 at 12:05 pm | Permalink

        Blame

      14. Tim
        Posted October 21, 2010 at 12:54 pm | Permalink

        How exactly is it that Mark is to blame for the rise of Glenn Beck and the racist tea partiers that he rules over?

      15. Posted October 21, 2010 at 1:12 pm | Permalink

        What do you mean, ytown?

      16. ytown
        Posted October 21, 2010 at 1:39 pm | Permalink

        Don’t you have a job Peter? Get back to work. Or am I working for your benefits?

      17. Posted October 21, 2010 at 1:49 pm | Permalink

        No, ytown, in fact, my money comes from a private citizen, so you can rest easy.

        I really am interested. You seem very passionate about commenting here and appear to have some specific goals, but are perhaps unwilling to share them?

      18. ytown
        Posted October 21, 2010 at 2:27 pm | Permalink

        I am glad you are interested.

      19. Peter Larson
        Posted October 21, 2010 at 2:58 pm | Permalink

        Well?

      20. Posted October 21, 2010 at 4:26 pm | Permalink

        I’m glad to see you back, ytown. I don’t remember you being around since right before Obama won, when you were predicting a big Republican victory.

      21. zzzzzzzzz
        Posted October 21, 2010 at 8:21 pm | Permalink

        This blog has become a boring snoozefest of politco re-hash. No fun at all. More fun articles please, Mark. Or at least more community based ones. I could watch Anderson Cooper replays if I wanted to hear this same old junk.

      22. Edward
        Posted October 22, 2010 at 8:21 am | Permalink

        Yes, please stop writing about things that matter and focus on things that make us laugh. Do you have access to photos of cute kittens with funny captions?

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