In remarks to the U.S. Hispanic Chamber of Commerce today, President Bush continued his rosy rhetoric on the economy. He predicted that in the future, people will look back at today’s financial situation and say that “tax cuts work”:
And I want to thank you very much for supporting the tax cuts plans that had good effect on small businesses all across the United States during that period of time. I think when people take a look back at this moment in our economic history, they’ll recognize tax cuts work. They have made a difference.
It’s doubtful Americans will remember this time period as an example of economic success. Yesterday, a government report from Energy Information Administration (EIA) , the statistical arm of the Department of Energy, broke with the Bush administration line, forecasting “for the first time that the country’s economy would enter recession in 2008.” The report reads:
U.S. real gross domestic product is expected to decline slightly in the first half of the year and then start growing again, with growth for 2008 as a whole at 1.3 percent, the slowest annual rate since 2001.
As the Financial Times noted, the EIA report did not specifically say that the U.S. economy would fall into recession, “but two quarters of negative growth is a common definition of recession among economists.”
Reuters said today that many economists foresee a recession “probably in quarter 1.” This assessment drops growth expectations to “none at all” for the first three months of this year, in contrast to the “anemic 0.2 percent they forecast last month.”
Making Bush’s tax cuts permanent won’t help the U.S. economy. They would cost taxpayers $4.3 trillion over the next ten years; Bush has proposed no measures to pay for this. Furthermore, they would increase the after-tax incomes of households with incomes above $1 million by an average of 7.5 percent, compared to a 2.3 percent increase middle-income households and 0.5 percent for lowest-income households.