Echoing Bush, Hannity and Luntz misrepresented impact of allowing Bush tax cuts to expire
SUMMARY: On Hannity & Colmes, Sean Hannity echoed President Bush's misleading claim during the State of the Union address that "116 million American taxpayers ... would see their taxes rise by an average of $1,800" if the Bush tax cuts are allowed to expire, a claim that Frank Luntz further exaggerated. In fact, because the tax cuts are largely skewed toward the wealthiest Americans, the "average of $1,800" figure cited by Bush dramatically overstates the impact of repealing the tax cuts on most Americans.
During the January 28 edition of Fox News' Hannity & Colmes, co-host Sean Hannity echoed President Bush's misleading claim during the State of the Union address that "116 million American taxpayers ... would see their taxes rise by an average of $1,800" if the Bush tax cuts are allowed to expire, a claim that GOP pollster Frank Luntz further exaggerated. Hannity stated that "the president said 116 million Americans would lose, see their taxes rise an average of $1,800" if the tax cuts expire. Luntz, who was conducting a State of the Union focus group, then asked the participants: "Over 100 million Americans would see their taxes rise $1,800. Doesn't that concern you?" In fact, because the tax cuts are largely skewed toward the wealthiest Americans, the "average of $1,800" figure cited by Bush dramatically overstates the impact of repealing the tax cuts on most Americans, as fact-checks of Bush's speech by The Washington Post and National Public Radio (NPR) documented.
Luntz also suggested that "when the Democrats actually react negatively to making the tax cuts permanent, that's a message for you as to what is happening in the Democratic primary." However, the three leading Democratic presidential candidates have proposed allowing the tax cuts to expire only for those making more than $200,000 (former Sen. John Edwards) or $250,000 (Sens. Hillary Rodham Clinton and Barack Obama) per year. As Media Matters for America has documented, according to the U.S. Census Bureau's data for 2006 -- the most recent year available -- only 3.4 percent of U.S. households have an income of $200,000 or more. Therefore, while Bush claimed that "116 million American taxpayers" would have their taxes increase if all of the tax cuts expire, only about 3.8 million of the United States' approximately 111.6 million households would see their taxes increase under the Edwards plan, with even fewer seeing an increase under the Obama and Clinton plans.
The Washington Post fact-checked Bush's assertion about the purported impact on allowing the tax cuts to expire in a January 28 report:
Bush makes the potential expiration of his tax cuts sound like a big deal for the average American, but his estimate of the financial impact is skewed because the cuts have disproportionately helped the very richest citizens. That fact boosts the average cost of reinstating the taxes, a circumstance that doesn't reflect what the typical household might experience.
Here's another way of looking at it: the median American household will pay roughly $828 more in taxes in 2011 if the Bush tax cuts expire, according to the Tax Policy Center, a non-ideological think tank venture. The richest 1 percent of American households, in contrast, would have to pay an extra $64,154 a year when the tax cuts expire.
Similarly, The NPR News Blog stated:
The president's use of averages is misleading and masks who actually benefits most from his tax cuts. The Citizens for Tax Justice estimate that the middle 20 percent of Americans will receive 11 percent of the Bush tax cuts between 2001 and 2010, while the top 1 percent will receive 36 percent. That means the middle 20 percent would lose about $540 a year in tax breaks if the Bush tax cuts are not renewed. The top 1 percent would lose an average of $34,000 a year.
From the January 28 edition of Fox News' Hannity & Colmes:
LUNTZ: What I'd like to do is show you one other clip that was very impressive here, because there is an extreme dichotomy between Republicans and Democrats. While they all agree on ending wasteful Washington spending and earmarks, when it comes to making the tax cuts permanent, there is a very different reaction. Let's take a look.
BUSH [video clip]: Most Americans think their taxes are high enough. With all the other pressures on their finances, American families should not have to worry about the federal government taking a bigger bite out of their paychecks. There's only one way to eliminate this uncertainty -- make the tax relief permanent.
LUNTZ: The single biggest, different response of everything in the debate. You Republicans or Republican-leaning people here loved it. You Democrats hated it. Why did you hate it?
UNIDENTIFIED WOMAN: I just -- I'm just tired of him making promises that he can't keep, so it just kind of, like, turned me off to the whole thing.
LUNTZ: So it didn't matter what he said? He could have said that he's no longer going to wear white underwear, and you would have reacted negatively?
UNIDENTIFIED WOMAN: I'm tired of the promises. He's just not doing his job.
LUNTZ: Leonard.
LEONARD: The people are listening to what the Democrats are saying, and they're telling us they are going to raise our taxes. And they're afraid of that. They know what happens.
LUNTZ: Sean, you've got a question. Let me just -- when you watch these debates and -- in this case, the State of the Union address -- and when you get that kind dichotomy -- and, again, these are relatively uncommitted people -- it's very surprising. But when the Democrats actually react negatively to making the tax cuts permanent, that's a message for you as to what is happening in the Democratic primary?
HANNITY: That's actually where my question is, Frank, and I am fascinated at the reaction of your focus group. You know I love these focus groups. We learn a lot from them. But the president said this when talking about the tax cuts -- and if you could specifically ask the Democrats in your audience, I would like them to know -- because the president said 116 million Americans would lose, see their taxes rise an average of $1,800, and he did fulfill that promise. Every American did get that tax cut.
LUNTZ: So let me ask you guys a question. Over 100 million Americans would see their taxes rise $1,800. Doesn't that concern you?
UNIDENTIFIED VOICES: Yeah.
LUNTZ: No. Some of you it doesn't.
UNIDENTIFIED MALE: Well, I don't think the tax cut should have been done in the first place. It harms middle- and lower-class people. It doesn't help them as much as upper income people.
LUNTZ: James?
JAMES: I agree, middle and lower class have not been positively affected.
HANNITY: Everyone got a piece of the tax cut, Frank.
LUNTZ: As Sean -- Sean is saying in my ear that everyone got a piece of those tax cuts, and yet you don't think so?
UNIDENTIFIED MALE: Well, the Democrats think it was tax cuts for the rich. Republicans think it's tax cuts for everybody. So that's why you see the dichotomy.
LUNTZ: So let's do a vote right here. The American people are watching. Do you want the tax cuts permanent? Who says yes? Who says no?
HANNITY: My hand's up.
So you just proved my point, the tax cuts didn't pay for themselves. There's a right time and a wrong time for them, this is the wrong time. We went from a 3 trillion dollar debt to a 19 trillion dollar debt. Instead of being fiscal, we had a republican administration with the backing of a republican senate and republican house go on a drunk spending spree. The clinton recession you bring up would have ended with or without the cuts, those cuts don't effect the overall economy immediately.
Seems hstybuf needs a history lesson. Since the end of WWII, tax revenues have doubled every 10-15 years regardless of the policies of the government.
Next time, check an almanac.
Fake cubans that you get in Cozumel. They got that part of capitalism right. ;)
May I suggest the Montecristo White or the Romeo y Julieta Reserve....both medium sticks and the leaf on both are fantastic. But as good as they are, Mrs Dave will still not let me smoke them in the house.
Pete,
sorry, but you did not provde a citation. I am prepared to retact all my remarks, but your statement sounded like anecdotal evidence.
Now, the WSJ on their editorial page, citing the Congressional Budget Office, January 2008, states that capital gains in 2002 were $269b, yielding tax revenues of $49b. I won't give the whole table, but both go up each year with the estimate for 2007 being $863b, yielding tax revenues of $127b. So over a five year period gains and tax revenues increased 3.2x
That blue text you see in my post? It's called a link.
pete, how am i supposed to know that blue is a link.
i can't give a link to the wsj, tell others to get their own paper like I do, go out every morning like tony soprano in my underwear to collect it.
Leave a link, man. No offense... your interpretation doesn't count.
"Orszag concluded that the tax cuts’ indirect impact on economic growth, investment and saving and could affect this year’s budget deficit anywhere from an increase of $3 billion to a reduction of $14 billion, depending on the assumptions used. "
Depending on the assumptions used... Right. That's quite a margin of error. Not to mention, any gains (if they exist) are going where? The lack of this joker's ability to produce any sort of real, tangible info is typical. Neocon cheerleading at its finest. Thanks Pete.
absolute b.s. they certainly paid for themselves. tax revenues quadrupled.
Just how much right-wing Kool-Aid did you have to guzzle to come to THAT conclusion????
Luntz 101:
If "Median" will help your argument, use it
If "Average" will help your argument, use it
Luntz knows you can bamboozle most American by using "average" and "median" selectively used.
Bill Gates shows up at a burger joint filled with 9 other middle class customers - the net worth of the "Average" McDonald's cuustomer is now about 10 Billion Dollars! - Quite the clientelle!
Right cuz I mean, all professors are screaming liberals who hate America. sheesh, that argument is tired.
the growth of the debt during the clinton and bush presidencies. this is money we all owe.
http://www.uwsa.com/monthlydebtimage.html
I would gladly pay hire taxes if it meant stock market gains like we saw in the 90's. I did a little market research. Under Bush, the Nasdaq has gone down 14.8%, the DOW is up 16.9% and the S&P 500 is up 1%. To put this into perspective, in order to make the same gains we saw under Clinton, by next year the Nasdaq would have to hit 10,990, the DOW would have to hit 35,172 and the S&P 500 would have to hit 4,193.
It's amazing that if you invested $10,000 in the Nasdaq on the day Bush was inaugurated in 2001, you would have only $8,517 today.
as this link notes 22 million jobs were created under clinton. when bush was bragging about 52 straight months of job growth, that is only since 2003, and does not include the jobs lost in the beginning of his administration. all his fault? probably not. but it does not back his claim that tax cuts produce jobs. his initial round of cuts did not.
http://www.factcheck.org/bush/facts_of_the_union_2008.html
Time after time Sheer Insanity beats the drum for tax cuts by claiming cutting Federal taxes increase Federal revenues.
If this were true, then we should just cut Federal taxes to $0 and the government would be rolling in the dough.
If this were true, then Insanity should be able to draw specific areas of increased Federal revenue to specific tax cuts. He can't, of course, and his addled callers aren't going to ever ask him to do so.
well, we had the internet bubble and 9/11 that knocked us down. I lost more than $2mm. But made it back since then. Can't blame the president for the stock market, it's not his job.
That's not true at all. The internet bubble burst under Clinton, but the Nasdaq still ended up much higher than it was when he took office.
It wasn't Bush who cut taxes on the wealthiest Americans? It wasn't Bush who claimed that these tax cuts were going to be great for the economy? It wasn't Bush whose policies increased income inequality? Income inequality is the true cause of the economic problems. If the masses can't afford their products and services, then how can the businesses do well? What kind of warped system do we have when CEO's who destroy companies walk away with 100's of millions in severence when the common employee is lucky to get 2 weeks pay?
Look, if you have 0% tax you get 0 revenue. If you have 100% tax you will also get 0 revenue. You have to pick a spot in between zero and 100 that maximizes revenue.
Barbara Tuchman, the historian, in her book The Distant Mirror, wrote of towns that were under siege during the middle ages. Grain brokers took great risks to bring grain to the towns for bread. The price of grain rose, and then rose more. The people were outraged and the towns imposed taxes equal to 100% of the "windfall" they perceived. The brokers said, well we won't take the risk any more. Grain supplies vanished and the people starved.
"Look, if you have 0% tax you get 0 revenue. You have to pick a spot in between zero and 100 that maximizes revenue.."
WOWWW!!! Who knew?
Pete, thanks for telling me the blue was a link. how was i to know. the article to which you refer is from the christian science monitor, so you must know that in my mind it is already suspect. the article relies primarily on jared bernstein, of whom i could find little in the way of bio, but he works at an organization that seems to be quite left-leaning.
the reference to bush's advisers is only to ed lazear, but the quote is inconclusive. can't be certain what he was saying, as it may have been taken out of context.
i am still willing to trade toilet paper for dollars.
this is not an investment forum, but you should have gold in your portfolios, or even silver which may do better than gold.
Already told you how I use them dollars to make myself feel richer... ;)
Now, you mentioned you made millions back from the stock market. Guess is you are most concerned about investment taxing. I made my money taking a risk and opening a small business using capital I made working for someone else (and still work there, now a two job kinda guy).
Bush's cuts help you indirectly and directly, large corporations get breaks and may invest in expansion or other activities that may grow overall revenues (though my experience in manufacturing is we grow revenues by moving production outside the country, cut internal head count and buy cheaper parts!). Good for you, but if unemployment goes up, is that an overall good thing?
Those same cuts did diddly squat for my manufacturing job. Great, I got $800 back. My wife and I used it to pay off debt.
It also did diddly squat for my small business. I had to turn my business into a sub chapter S corp. Bush's cuts do nothing for the backbone of the business world...
So I'm glad you can enjoy your benefits. Mebbe I can't speak for the rest, but I cover both of them groups and say again (ok, with more definition, the 1st time) cuts directed at only the wealthy corporation owners does not always help. Making them permanent is B.S. when giving my small business can stimulate growth too. Ignoring inflation's effect on my living wages will supress my will to spend, thus ruining any tax effect unless the idea is to completely pay for the cuts by major corporations buying from other major corporations. That is a whole nuther argument altogether...
The immediate effects of a tax cut are, generally, a decrease in the real income of the government and an increase in the real income of those whose tax rate has been lowered. In the longer term, however, the effect on government income may be reversed, depending on the response that tax-payers make. Depending on the original tax rate, tax cuts may provide individuals and corporations with an incentive for investments which stimulate so much economic activity that even at the lower rate more net tax revenue will be collected.[citation needed]
The longer term macroeconomic effects of a tax cut are not predictable in general, because they depend on how the taxpayers use their additional income and how the government adjusts to its reduced income.
Snoopy, I got my base capital from creating a company. I took in a partner who ran it. Got cheated out of a lot, but still came out with something.
I went to ucla, went to vietnam for three years, israel for 3 1/2 years, then law school, and houston just in time for the big energy meltdown.
well, best of luck to you snoopy. I wish for you all the best. For what we are about to receive, may we all be truly thankful.
I actually insist that it's misleading to say anyone's taxes will go up. It would be more accurate to say that tax rates will go back to the level they were at before what was avowedly a temporary reduction. We had a tax "sale," if you will, and the sale is now coming to an end.
If a grocery store runs a sale on soda, you'd probably think it rather weird if the day before the sale ended someone was going around proclaiming "soda prices are going up tomorrow," even though technically, they'd be right: The price tomorrow is going to be higher than the price today. But you knew going in that the lower price was a temporary condition. That was the deal.
Same thing here: It was said going in that this was a temporary cut. It's coming to an end. Technically, it's true that taxes will go up in the same way the soda prices were going up - but it's misleading to try to make it appear that this is anything other than a return to a prior condition.
Incidentally, in case no one else has said this (I'm running late and haven't read all the comments), when this temporary cut was passed there were people who noted that most of the benefits went to the wealthy and predicted that Bush would move to make them permanent, betting that no one would be willing to be tarred with the label "Raised Taxes."
the really high marginal tax cuts were made under reagan. i think it was called firpta. but at the same time they also cut all the loopholes, like for passive income tax write offs on railcars, real estate. that's how i remember it. so those industries that relied on those writeoffs went under. but then the dems wanted to raise the marginal rates once again. let people keep most of their money, that's my theory, much as it does me.
i am typing as if in archie and mehitable because if it hit those other keys i get thrown out. one dollar to the first person who knows to whom i am referring.
Even if the assertion were true, the 116 million represent the upper 1/3 of the population. Since no numbers were given, and the median income is around 50,000, there's no way that people in the 50 thousand range would end up paying back as suggested. So the 116 million is very likely to be an arbitrary number picked out of the air, for effect. In fact, only about 5% make in excess of 100 thousand a year, and it maybe this group and higher might end up with their taxes returned to where they were before the Bush cuts. The rest of us are already paying through the other subtle tax which Bush has imposed with his trillion dollar deficit spending spree.
If the money used by government doesn't come from current taxes, it comes from our future, and in increased basic cost of living.
The days are gone when we believed a newscaster or commentator toss off a statistic. A false word, and they'll trip themselves up every time... I doesn't get by us anymore.