Newt Gingrich is no doubt a smart man.
So he surely knows better than to write what he and his co-writer Peter Ferrara, who got paid by Jack Abramoff to write favorable op-eds about folks like the Choctaw tribe and the Mariana Islands, toss off in The Wall Street Journal today. Here’s the headline and sub-headline:
Make the Bush Tax Cuts Permanent
Unemployment is down since the president had to give way on taxes, but trouble still looms in 2013.
Correlation is not causation, but Gingrich and Ferrara would have you believe that the unemployment rate has fallen sharply in the last three months all because Obama and the Republicans agreed on a big package of tax cuts in December.
By the end of last year, President Obama was faced with the utter failure of his economic policies. The unemployment rate in mid-December was 9.8%, marking the 16th straight month it was at 9.5% or above—the longest run since the Great Depression.
Neat trick on the “mid-December” thing. That’s when November numbers were reported, but it’s misleading to say the rate then was 9.8 percent. December’s rate would end up being 9.4 percent, but using the November rate helps Gingrich and Ferrara make their bogus case that the tax cut extension (and not, of course, the Keynesian deficit spending it necessitated) caused the plunge in unemployment.
Then there’s this disingenuousness:
Since World War II, the average recession has been 10 months in duration, with the following recovery stronger the deeper the recession. Based on this record, the U.S. economy should have been in its second year of booming growth by December 2010. Instead, an all-time record 44 million were struggling in poverty—one in seven Americans—with over 40 million on food stamps.
The logical flaw here—sort of a cousin to the Obama Bear Market thesis—is: the average recession is 10 months long, ergo this one should have been 10 months long, too. Thing is, this recession was the worst since the Great Depression. There was nothing “average” about it.
A further problem for Gingrich and Ferrara: The recession started in December 2007 under George W. Bush. Their hypothetical ten-month recession, then, would have ended in October 2008 under Bush. Alas, that month was when the crash that began a month earlier took hold in earnest, and the economy was in recession for the last thirteen months of the low-tax Bush presidency and Obama inherited a still-reeling economy that many thought was headed for a second Great Depression.
Here’s where Gingrich and Ferrara blame the Great Recession on the Obama tax bugaboo, as opposed to, say, the insolvency of a great deal of the banking system, shriveling lending, the continuing collapse of the multi-trillion-dollar housing bubble, the sharp decline in consumer spending, etc.:
Why? During his first two years in office, Mr. Obama persistently threatened the economy with increases in the top tax rates of virtually every major federal tax on the nation’s employers and investors.
If the president had his way, the two top income tax rates would have increased by nearly 20% this year, counting his proposed phaseouts of deductions and exemptions. The capital gains tax would increase by nearly 60%, counting the new ObamaCare tax on investment income in 2013. The tax rate on dividends would nearly triple, counting the new ObamaCare tax as well. The Medicare payroll tax would increase by over 60% for the targeted income earners.
Did Obama propose to “nearly triple” the dividend tax rate? No. He wanted it to move from 15 percent to 20 percent (24 percent including the health-care tax).
Gingrich and Ferrara then go on to say that only the richest create jobs and boost the economy:
This means that the rates of virtually every major federal tax will be increased on precisely those who create new jobs and invest in the economy.
And they conclude, naturally, with a heartfelt plea: Keeping Bush’s tax cuts for the rich is really all about protecting the workin’ folk:
Working people, not the rich, would be hurt the most, losing jobs and wages as a result.
To avoid that, this year the House Republican majority should pass a permanent extension of the Bush tax cuts.
A virtuoso performance there, boys.Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at email@example.com. Follow him on Twitter at @ryanchittum. Tags: Newt Gingrich, Obama, Peter Ferrara, The Wall Street Journal, WSJ Editorial Page