"In addition to a soaring stock market, 6.6 million jobs have been created since tax relief measures went into effect in 2003. Our deficit situation has also improved as tax revenues have increased at double-digit rates over the past two years"
About this Quote
Randy Neugebauer points to the mid-2000s expansion as vindication of the 2003 tax cuts, linking a rising stock market, millions of new jobs, and surging revenues to that policy. The backdrop is the early post-2001 recovery: the dot-com bust, 9/11, and a short recession had weakened growth. The Bush administration pushed the Jobs and Growth Tax Relief Reconciliation Act of 2003 to spur demand and investment through lower rates on income, dividends, and capital gains. By 2005-2007 the economy was in a strong cyclical upswing. Equity indices climbed, payrolls added roughly 6 to 7 million jobs from mid-2003, and federal receipts grew at double-digit rates as corporate profits, bonuses, and capital gains swelled.
What Neugebauer highlights is real, but the causal chain is contested. Revenues did jump, yet from a depressed base, aided by a global boom, low interest rates, and a housing and credit surge that inflated profits and taxable gains. The deficit narrowed from its 2004 peak toward 2006-2007, but remained sizable and was flattered by cyclical momentum. Mainstream analyses from the Congressional Budget Office and many economists found that tax cuts do not pay for themselves; faster growth offsets a portion of the lost revenue but not all of it. The long-run fiscal picture was shaped more by spending commitments and demographic pressures than by short bursts of revenue growth.
Job creation numbers also mask unevenness. Employment-to-population had not fully recovered its pre-2001 highs, many new jobs clustered in construction and services tied to the housing boom, and wage growth for median workers lagged behind productivity. A roaring stock market disproportionately enriched asset holders, widening distributional gaps even as headline indicators improved.
The statement captures a moment of cyclical strength and turns it into a policy brief for supply-side tax relief. It leaves out the fragility of that expansion and the subsequent 2008 crisis, which revealed how much of the apparent fiscal and market health rested on leverage, asset inflation, and temporary tailwinds rather than on a durable, self-financing tax strategy.
What Neugebauer highlights is real, but the causal chain is contested. Revenues did jump, yet from a depressed base, aided by a global boom, low interest rates, and a housing and credit surge that inflated profits and taxable gains. The deficit narrowed from its 2004 peak toward 2006-2007, but remained sizable and was flattered by cyclical momentum. Mainstream analyses from the Congressional Budget Office and many economists found that tax cuts do not pay for themselves; faster growth offsets a portion of the lost revenue but not all of it. The long-run fiscal picture was shaped more by spending commitments and demographic pressures than by short bursts of revenue growth.
Job creation numbers also mask unevenness. Employment-to-population had not fully recovered its pre-2001 highs, many new jobs clustered in construction and services tied to the housing boom, and wage growth for median workers lagged behind productivity. A roaring stock market disproportionately enriched asset holders, widening distributional gaps even as headline indicators improved.
The statement captures a moment of cyclical strength and turns it into a policy brief for supply-side tax relief. It leaves out the fragility of that expansion and the subsequent 2008 crisis, which revealed how much of the apparent fiscal and market health rested on leverage, asset inflation, and temporary tailwinds rather than on a durable, self-financing tax strategy.
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| Topic | Money |
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