In 2002, Vice-President Dick Cheney and the Bush administration’s economic team met to discuss a second round of tax cuts, which would follow Bush’s 2001 cuts. At the meeting, “then-Treasury Secretary Paul H. O’Neill pleaded that the government — already running a $158 billion deficit — was careening toward a fiscal crisis.” Allegedly, Cheney replied by saying that “deficits don’t matter.”

Six years later, the Bush administration’s consistent belief that deficits don’t matter has increased the national debt to over $10 trillion. This is the highest dollar amount ever, and pushes the debt to 69% of the gross domestic product, which is the highest percentage since 1955.

Bush has presided over the largest increase in the debt of any president in history. When he took office, “the national debt stood at $5.727 trillion.” In eight years, there has been an increase of over 70%.

And the Bush administration has seemingly not learned any lessons from this, as the FY2009 budget had a near-record deficit of $407 billion. This deficit was calculated before the administration spent $900 billion rescuing troubled financial institutions and proposed a $700 billion economic bailout. The bailout bill put forth by Treasury Secretary Henry Paulson increased the federal debt ceiling – the amount to which the debt is legally allowed to go – to $11.3 trillion.

As the Center for Budget Policy and Priorities has shown, 42% of the “fiscal deterioration” and explosion of the deficit that occurred under Bush was due to tax cuts:

The key factors have been large tax cuts and increases in security-related programs. For fiscal 2009, some $1 trillion of the $1.3 trillion deterioration in the nation’s fiscal finances stems from policy actions, and tax cuts account for 42 percent of this $1 trillion deterioration.

The conservative practice of cutting taxes while spending millions on wars has led to the largest debt in half a century, and Sen. John McCain (R-AZ) is proposing exactly the same policies. An analysis by the Center for American Progress found that if McCain’s economic plan was in place for eight years, it would leave a debt of $12.7 trillion, besting Bush’s record.

Our guest blogger is Michael Ettlinger, Vice President for Economic Policy at the Center for American Progress Action Fund.

Pop quiz: you’re the governor of a state that produces the most oil per-capita of any state in the union—do you want gasoline prices paid by consumers to go up, or down?

Once suspects that Governor Sarah Palin of Alaska knows the answer. No state in the nation has better economic growth when gas prices go up than Alaska, and no state has worse economic performance than when gas prices go down. Of the last 30 years, in 18 of them gas prices have gone up. Alaska’s real Gross Domestic Product grew by an average of 6% in those years — better than any other state.

In 11 of those years gas prices fell. Alaska’s average change in GDP in those years: -4.8%, which was the worst economic performance of any state during those years. The effect is amplified when the gas prices rise or fall by greater amounts. When gas prices go up by over 5%, Alaska’s state GDP increases by an average of 7.8 %. When gas prices fall by over 5%, the Alaska economy falls by 8.6%.

While the rest of the country mourns rising gas prices, it’s good news if you’re Alaska’s governor. Alaska taxes the oil it ships to out-of-state consumers and uses the money, in part, to send “dividend” checks to its citizens. Just this year, with gas prices hitting record highs, Governor Palin got to send every Alaskan $3,269. That’s one ticket to popularity.

Read the full report here.

Today, a pair of conservative tax myths crept into the media. The first appeared on Fox News, when Sen. John McCain’s (R-AZ) economic adviser Nancy Pfotenhauer explained that she finds it “personally kind of offensive” to claim it is possible to cut taxes for a majority of the population, because “30% of American families don’t pay any federal income taxes to begin with.” Watch it:

The second myth was put forth by Karl Rove, who argued in the Wall Street Journal that “conventional wisdom says tax cuts have lost their political power,” because “one-third of all filers have no federal income tax liability and nearly 40% of all federal income taxes are now paid by the top 1% of taxpayers (60% by the top 5%).”

Pfotenhauer said she wanted someone to “unpack the math.” So here is the math, unpacked.

Pfotenhauer is talking as if the only tax on American families is the federal income tax. But while the bottom one-third of taxpayers do not pay federal income taxes, “they do work and pay federal payroll and excise taxes as well as state and local taxes.” In fact, according to an analysis by the Urban Institute “most Americans actually pay more payroll taxes than federal income taxes.” Also, the top quintile’s percentage of payroll taxes paid is lower than that of the other four quintiles. This is a tax affecting anyone that receives a paycheck and that takes a higher percentage from the middle class than it does from the top of the income ladder.

Rove’s assertion, meanwhile, is one put forth by many conservatives, including Glenn Beck, Newt Gingrich, Rush Limbaugh, and Bill O’Reilly. And while it is true that the top 1% pay almost 40% of income taxes, Rove and co. are missing the point. The rich are paying such a high precentage because they are making more, while everyone else’s wages have stagnated.

According to the Internal Revenue Service (IRS), “the richest 1% of Americans in 2006 garnered the highest share of the nation’s adjusted gross income for two decades,” and “the average tax rate of the wealthiest 1% fell to its lowest level in at least 18 years.”

Meanwhile, “incomes have declined by 2.5 percent among the bottom fifth of families since the late 1990s,” and “have grown by just 1.3 percent among the middle fifth of families…well below the 9.1 percent gain among the top fifth.” As an analysis by the Center for American Progress shows, since 2001, weekly wages have only gone up 0.3%, despite corporate profits going up 13%. This puts income concentration at its highest level since 1928.

With the math unpacked, it’s clear that conservatives have their numbers and their reasoning all wrong.