Boom That Wasn't: The Economy Has Little to Show for $860 Billion in Tax Cuts

Publication Date: October 2005

Publisher: Economic Policy Institute

Author(s): Lee Price

Research Area: Economics

Type: Brief

Abstract:

Since 2001 President Bush and congressional leaders have promised that enacting each of a series of tax cuts would strengthen the economy by bringing faster growth, more jobs, and greater investment. With Congress again debating whether to extend past tax cuts and enact new ones, it's time to review how much the last four years of tax cuts have affected the U.S. economy and budget outlook.

Unfortunately for most Americans, the tax cuts since 2001 have not made today's economy stronger. Over the last five fiscal years, the tax cuts have had a direct cost of $860 billion and (with interest costs) a total effect on the deficit of $929 billion. By creating excessive permanent deficits, they have lowered our future standard of living.