Mitt Romney’s economic agenda is a disaster. I am not talking about the distributional effects—how equitable it is. As I wrote yesterday, his plan would sock the middle class with $86 billion in tax increases to subsidize tax breaks for the wealthy.
No, I am talking today just about whether his plan would even work. It won’t.
As explained by his senior adviser Glenn Hubbard, who as chairman of George W. Bush’s Council of Economic Advisers helped bring us the 2008 cataclysm—and made evident in Gov. Romney’s own tax proposal—his idea is old-fashioned, trickle-down economics: Cut tax rates on corporations and the wealthy because doing so, they claim, will increase wages and job creation. That is exactly what the Romney campaign claimed yesterday in response to the Brookings analysis, and what Hubbard and Romney have been saying throughout this campaign. It is the old claim that if only we take care of the “job creators,” all will be well.
OK, Let’s go to the charts.
First, corporate profits are already at an all-time high as a percentage of GDP, higher than before the ’08 cataclysm, higher than EVER!
Second: Despite this, wages are at an all-time low as a percentage of GDP, having declined almost consistently since the Bush tax cuts were passed in 2001.
Third: Job creation is stagnant at best, with unemployment stuck at 8.2 percent and the work force participation rate, languishing around 58 percent—a level not seen since women entered the workforce in large numbers.
The message is pretty clear: The types of tax policies Gov. Romney is recommending have been tried. They have produced huge corporate profits and skewed income distribution, they have not produced wage growth or jobs.
As President Obama said the other day, we have tried their approach and it has failed. This is no longer an ideological debate. It is matter of simply reading the data we have from past experience. As they say, if you don’t learn from history, you are bound to repeat it.