Don't Blame the Tax Cuts
Donald Luskin highlights some fine economics reporting from Bruce Bartlett that wrecks the Left's claim that "tax cuts for the rich" caused the federal budget deficit.

As leftist rhetoric continues to assert on an almost daily basis that the current federal government deficit is the result of tax cuts for "the rich" that have hardly even taken effect yet, new statistical data from the Internal Revenue Service helps reveal the truth. Our friend Bruce Bartlett points out that the new data on tax-year 2001 (here and here) reveals that the aggregate income of the top 1% of taxpayers fell by $243 billion, reducing their share of total income from 20.8% to 17.5%. In other words, the rich got poorer.

And since the rich pay most of the taxes around here, overall tax receipts fell dramatically in 2001 - and are estimated in the federal budgeting process to keep on falling in 2002 and 2003 - hence the forecasted deficits. The chart tells the story - tax receipts are falling while GDP has continued to rise. In fact, since the top in 2000, individual tax receipts have fallen by over 23% - and there sure hasn't been any 23% tax cut in effect since 2000. And Social Security tax receipts continue to rise, indicating that it's not a matter of overall unemployment.

It's that the rich are suffering. Bartlett says it's "due entirely to the stock market collapse and the recession." In that environment, the annual income it took to qualify for the top 1% "fell from $313,469 to $292,913. This fall in income is what led to a decline in aggregate tax payments by this group from $367 billion to $301 billion."

Nevertheless, Bartlett warns on his blog, even though the data proves the recession and the stock market collapse caused the decline in tax payments from the very wealthy, and not the tax cuts which, after all, have only barely taken effect yet, "this data will undoubtedly be used to show that the Bush tax cut benefited the rich disproportionately."

In other words, the data will be misrepresented by Democrats to lie to you. I suspect the media will, for the most part, regurgitate the lie unchallenged.