Final grade on the Bush tax cuts: Failure to produce jobs
The Bush Administration called the tax cut package, which took effect in July 2003, its "Jobs and Growth Plan." The president's economics staff, the Council of Economic Advisers (CEA, see background documents), projected that the plan would result in the creation of 5.5 million jobs by the end of 2004—in other words, 306,000 new jobs in each of the 18 months from June 2003 to December 2004. Even without the passage of Bush's tax cut plan, the CEA projected that the economy would generate 228,000 jobs a month.
With the newly released payroll employment data for December 2004 it is now possible to assess whether the administration's tax cut strategy produced the employment growth that was projected (see table and figure below). The final verdict is grim. Job growth over the last 18 months has fallen short by 1,703,000—more than one-third less than the number of jobs the administration said would be created without the tax cuts. Given that the economy failed to produce the number of jobs expected with no policy change, it seems hard to argue that the tax cuts were a successful strategy in adding any jobs—the promised 1.4 million additional jobs never materialized. The announced revisions (up 236,000 in March 2004) to the payroll employment series (see Data Note below) do not materially change this assessment.
This job growth comparison can also be presented on a monthly basis over the June 2003 to December 2004 period, as is done in the figure below. The December job growth of 157,000 jobs falls short of the monthly 306,000 target by 149,000. As seen in the chart below, job creation failed to meet the administration's projections in 15 of the past 18 months.
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