President Obama yesterday gave a major economic speech in which he took apart the conservative theory of trickle-down economics, the belief that cutting taxes and regulations spurs prosperity at the top of the income scale that then drips down to everyone else. “That theory fits well on a bumper sticker. Here’s the problem: It doesn’t work. It has never worked,” Obama said.
During the speech, Obama reserved specific criticism for the Bush tax cuts, saying that “in 2001 and 2003, Congress passed two of the most expensive tax cuts for the wealthy in history. And what did they get us? The slowest job growth in half a century. Massive deficits that have made it much harder to pay for the investments that built this country.” This drew the ire of Washington Post fact-checker Glenn Kessler, who said Obama’s speech contained “significant factual error and/or obvious contradictions” (three “Pinocchios“) because of the statement:
The Bush tax cuts have been roundly criticized for being inefficient and poorly designed, but it is a stretch for Obama to blame slow job growth on the tax cuts. That are many factors that affect job growth, and it is silly to directly link the 10-year-old tax cut to today’s job growth — just as it is silly to claim that Bill Clinton’s tax increases resulted in a gain of 23 million jobs. Obama’s claim of the “slowest job growth,” in fact, includes the loss of jobs under his administration… Finally, Obama blames the Bush tax cuts for “massive deficits.” It is certainly true that the Bush tax cuts helped blow a hole in the budget. But they did not do it all by themselves.
Let’s unpack these one by one. First, Kessler claims that its unfair to say that the Bush tax cuts were for the wealthy. But last year, fully half of the entire benefit from all of the Bush tax cuts flowed to the richest 5 percent of Americans.
Next, Obama’s argument is clearly that the Bush tax cuts didn’t lead to job growth, as conservatives claimed they would. It’s a perfectly reasonable — and entirely accurate — shorthand to say that the Bush tax cuts were followed by “the slowest job growth in half a century.” Obama never said that the tax cuts, and only the tax cuts, were the sole factor that caused that slow growth. And of course Obama should count jobs lost in his own term towards this total. In case Kessler hasn’t noticed, the Bush tax code is still in place.
It’s also perfectly reasonable to attribute deficits to the tax cuts, even if they’re not responsible for every dime of the fiscal decline. Here’s a chart laying out which aspects of fiscal policy contributed to the deficit over the next decade. The huge brown stretch in the middle is the Bush tax cuts:
In fact, if everything that happened over the last decade had happened, including the wars and the recession, except for the Bush tax cuts, “total debt as a share of GDP would be under 50 percent this year — instead of pushing 70 percent — and it would be expected to stay under 60 percent for the rest of the decade.”
It seems that Kessler decided to slam Obama’s speech at dishonest because, in an address meant for the general public, he didn’t explain each and every aspect of slow job growth or go in-depth on every factor that caused the deficit, instead pointing to broad trends showing that the Bush economic plan did not do any of the things that it was meant to do. This is hardly a stretch and is certainly not worthy of a rating corresponding with “significant” errors. But this is hardly the first time Kessler’s ginned up his own meaning of true when it comes to budget matters.