Some tax cuts, huh?

President Bush recently credited his tax cuts as the reason why the U.S. economy is growing.  But as the following two charts from the Center on Budget and Policy Priorities show, the economic expansion is slower than average, and since 2001 a large portion of the tax cuts have gone to the most wealthy.

Chart one: the kind of economy the tax cuts have caused.

Chart two: which income bracket has benefited the most.

I am not trying to engage in class warfare.  Someday I hope to be up there in income.  But if you believe there is a difference between needs and wants, and that hard work ought to be rewarded, then you can't say that it is alright for wages and salaries to be this low.

Another thing: tax cuts are special -- there is no other way of putting it.  If you want to argue for a regressive or flat tax, then fine be my guest.  But tax cuts are supposed to go to the income group that is most likely to spend it so the circular economic flow can continue.  This is basic macroeconomics.  Any money that gets removed from the circular flow of economic activity prevents the overall economy from growing to its potential.  An example of this is when money is saved instead of spent.  But the more money that is spent, the more money that is out there to help businesses, especially those smaller ones. 

When I say circular flow, this is what I mean:

The last time I wrote about this sort of thing, which was last spring, I was called a socialist.  But quite the contrary.  We are a consumption based economy.  There are positives and negatives to that economic system, but that is what we are.  The best way to help the economy through tax cuts is by giving tax cuts to individuals most likely to spend that money, not save it.  And the tax cuts for the rich?  Well, how about paying down part of the National Debt?  A locked box doesn't sound like such a bad idea now, does it?