Barack Obama: Bigger Tax Cutter than Bush

A few weeks ago on one of my favorite sites, Don’t Quit Your Day Job, I made a comment on one of their excellent-as-usual technical analyses, suggesting that they should turn their analytical powers on a claim I’d been hearing: that Barack Obama is a bigger tax cutter than George W. Bush, and perhaps the biggest tax cutting president in history.

I’m not a numbers guy, and you’ll rarely find a lot of math at Married (with Debt). I prefer to leave that stuff to the experts, like PK at DQYDJ.net. Being a community-minded site, they often ask readers to offer questions. I’m glad PK reached out to me and shared the results of his analysis into the claim, and allowed me to offer a response, which you can read today at DQYDJ.

My interest in the question of taxes is purely behavioral. Tax policy is very esoteric, and as with most economic subjects, it is very malleable and open to various interpretations. My interest is centered around cognitive bias, specifically confirmation bias. This is the tendency of people to reject facts that don’t uphold their own beliefs. I was interested to see how people who hate Barack Obama would react if they learned he was the biggest tax cutting president in history.

The reason I asked was to find a Yes or No answer:

Is Barack Obama a bigger tax cutter than George Bush?

It turns out that yes, he is.

PK did a great analysis which is also published today and concluded that “Well, some articles have made the claim that over his first 4 years, President Obama has been a more prolific tax cutter than President Bush. Is it the truth? It is, yes! However, this political claim (like, well, all political claims) needs to be un-spun so you can see where it comes from.”

He goes on to get into the weeds of tax policy, permanent cuts vs. temporary cuts, and whose tax cuts will ultimately leave more money in the economy. There is also some difficulty in comparing Bush vs. Obama because GWB had two terms and Obama has less than one.

He also built an interactive chart where you can see for yourself, and remove certain tax cuts from the equation if you don’t agree with them.

Getting more in-depth with his conclusions, PK likens the exercise to a Choose Your Own Adventure Book (if you are 30 years old or older, you should remember these from your childhood):

“One merely has to look at the estimates over a 10 year time-frame to see that the Bush Tax cuts ended up leaving more money in the private economy than the Obama provisions. It also doesn’t take federal spending into account.

 

There are two ways to spin this:

  • President Obama’s tax provisions left more money in the economy during his first term.
  • President Bush’s tax provisions left more money in the economy over the length the provisions were active.

Your choice… choose your own!”

I also went on to rib PK a bit as an economist and remind him that economists must also be unspun at times. Harry Truman once famously said, to paraphrase: Send me a one-armed economist because I’m tired of hearing “well, on the other hand…” PK then brought up the joke: if you ask 5 economists for their opinion on an issue, you’ll get 6 answers.

This dissonance exists where politics and economics meet. Both exist independently, but both co-exist depending on how someone wants to use the other for gain. Almost any fact can be spun to confirm whatever we are trying to confirm.

As I mentioned in the DQYDJ post, some of you will suffer from confirmation bias when you hear that Obama is a prolific tax cutter. This does not fit with the Fox News narrative you’ve been sold.

Fox News actually takes confirmation bias to a whole new level by trying to cure it. They do this by painting the opposition as the devil. Therefore, any information, whether it is factual or not, is not worthy of respect because it is devil-speak.

Fox News has made it so easy for armchair idiots to be political experts. If you hear a fact you don’t like, call the source a liberal commie asshole and YOU WIN! the argument

This type of debate style has been empowering 65 year old grade school dropouts since 1996.

An avowed Obama hater once asked me to name one thing Obama did to improve my life. When I said he cut my taxes, the hater’s mind was so seriously blown that I actually saw smoke come out of his ears. I think he is still scouring the Internet from a dark hovel trying desperately to find some morsel to disprove this fact.

Confirmation bias is probably one of the biggest hurdles to compromise. Unless both sides are willing to accept facts as facts, we can never get to the heart of a problem and solve it.

American politics has become too territorial, and a winner-take-all game. The only way one side can win is if the other side loses every time.

As the old adage goes, you’d be surprised at what can be accomplished when no one cares who gets credit (or blame).

Before you type that angry comment…

I’m not an Obama apologist. I did vote for him in 2008, but I probably will not vote to re-elect him. This is because he is wishy-washy, doesn’t do what he said he’d do, and is a general all around loser when it comes to fights.

Nobody likes a loser.

Now don’t go expecting a lot of politics on this site. Though I have been a political consultant for about 7 years now, I try to avoid it like the plague in my real life. That’s because most people I encounter either don’t know what they are talking about, or can’t have a debate without resorting to name calling.

If I thought for one second that I could overcome the power of confirmation bias, I’d be writing every day on ways we can put solutions ahead of politics and solve real problems.

Problem is nobody wants that.

Not the politicians. Not the media. Not even the American public, who will tell you in every survey that they hate partisan rancor (they don’t).

Politics is mainly about platitudes. As defined by the genius HL Mencken, platitudes are an idea (a) that is admitted to be true by everyone, and (b) that is not true.

Until it moves beyond that, I’ll remain disinterested.

Now mosey on over to Don’t Quit Your Day Job to see for yourself.

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31 Comments
  1. This is an interesting case to see! On the note that he’s essentially cut more taxes that we’ve thought, I think Obama has gotten more done than has been perceived, too. Sure, he didn’t accomplished everything he promised, but he has made headway on some of the big goals of his, like healthcare. There have been a few writeups on how he’s actually done more in his first term than previous presidents (like Bush II). While I’m not wildly excited about his accomplishments, I do think he deserves a bit more credit than he’s gotten.
    Jeffrey recently posted..Multiple Bank Accounts: Is More Better or Worse?My Profile

    • I agree. In 2009, only 12% of people surveyed knew that Barack Obama had lowered their taxes. A lot of the ignorance comes from a lack of communication to the people. Hopefully he can tune that up.

  2. Thanks for the collaboration – this was a fun one, all because you left a good comment!

    Hopefully these articles get loads of action the next few months?
    PK recently posted..President Obama Is a Bigger Tax Cutter Than George BushMy Profile

    • Yes, thanks for reaching out. It was a good collaboration, and some good content came out of it.

  3. Very interesting indeed. Hopefully not goign to ruin Obama’s chances this year..
    SB @ One Cent at a Time recently posted..Managing Personal Finance is All About Making ChoicesMy Profile

  4. Very informative. It’s always good to hear the hard facts – what has been done for the people.
    Dannielle @ Odd Cents recently posted..Comment on The Ten Percent Solution by ElleMy Profile

  5. I try to stay out of political discussions online, but the tax-cuts are only one side of the coin. I like the tax cuts personally, but tax cutting combined with federal spending increases is a recipe for disaster.

    • I agree with your statement about spending. I also try to avoid politics online because it’s too hard for a lot of people to debate without getting personal.

      I’m glad to see comments so far have been thoughtful and respectful. Thanks for stopping by.
      John recently posted..Make a Monthly Debt Budget: Rule 3My Profile

  6. I’m with you: I can’t stand how each side demonizes the other. We’ll never get anything done if people can’t compromise, and it’s impossible to compromise with a man/woman you’ve openly called a moron on television.
    AverageJoe recently posted..Unplug Grandma’s Life Support…Quick! Inherited IRA rules changing?My Profile

  7. I agree with Jeffrey.. Obama did accomplish a lot during just the first two years of his term. The question though, is what he accomplished a good thing? Debatable.

    To your Fox News comment… the same can be said for the rest of the media, only for the opposite agenda. The difference is, Fox News admits who they are while the rest of the major media outlets try to portray themselves as unbiased.

    I actually love that you’ve gone political on your blog. What better way to stir up controversy? Usually, a good controversy leads to more page views. Nice collaboration guys!
    Matt @ RamblingFever Money recently posted..Does Money Really Win Elections?My Profile

  8. He also believes that he and the government have the right to conduct summary executions without due process anywhere in the world, so…. dunno, conservatives get away with spending money because they spout off about reducing govt. when they don’t, and it seems liberals get away with reducing civil liberties because they claim they are for it when they really aren’t.

    I have very little faith in any politician these days; few have the upstanding character of someone like Ron Paul.
    Financial God recently posted..Why You Need Spare Cash to Cover EmergenciesMy Profile

    • Great observation! It’s always easiest to do something when you insist you don’t. I had a payday loan lobbyist storm out of my office yesterday because he didn’t want a loophole closed, but insisted his people didn’t use it. That’s when you know someone is lying.

  9. As a European citizen, it is always interesting to read about things going on in the U.S. It might be so that Obama cut bigger tax, but Bush made bigger impact indeed!!!
    Julie recently posted..denturesMy Profile

    • Hi Julie, always great to hear from my international readers.

      Are you referring to the wars of the last decade?

  10. I am not trying to be contrary, but the argument that the President has repeatedly used to attack the idea of continuing the Bush tax cuts was that the country cannot afford tax cuts. Couple that with the coming elevation of the USA to having the highest corporate tax rate in the world (when Japan lowers theirs within the month), and you have a truly confusing picture.

    One thing that is not confusing is that the indebtedness of our nation will drag down our economy and the economic prospects of future generations.
    Thad P recently posted..Tips To Blog Better | Lessons I Am LearningMy Profile

  11. Statistics mean something else when they happen to you personally. If you’re out of a job, your own unemployment rate is 100%. The S-CHIP tax on tobacco products may have well been conceived under Bush, but got enacted under the Obama. Under this vile tax, my budget yard cigars went from a typical buck a stick to a minimum of a buck fifty.
    101 Centavos recently posted..Gardening InterludeMy Profile

  12. I hear ya – just like the saying “it’s a recession when my neighbor loses his job, and a depression when I lose my job.”

    That’s quite a price jump. Are “yard cigars” what you smoke when you are outside tending to the garden?

  13. Spin is amazing isn’t it?

    One of my greatest excitements if and when I lose my job is to see my tax bill go down to minimal figures and rally against rich people! lol
    Sam recently posted..World of FinanceMy Profile

    • I agree. People lack foundational beliefs. Rich people aren’t to blame. Greed is to blame. We can support rich people while denouncing greed, I hope…

  14. It is interesting to hear Fox News being blamed for thoughtless political blather when you see the same people on all the networks. Political theater indeed.

    My personal problem with Obama was his leaving health care to the Pelosi congress, it will be screwed up for years (and yes I know it was already screwed up, I work in it daily). And his energy policies will cost our country a great deal.

    No name calling here, I love a good conversation, and am always willing to agree to disagree. Our founding fathers encouraged that with our system of government.
    Dr Dean recently posted..The Girl With The Dragon Tattoo: Ten Personal Finance Lessons!My Profile

    • Yep, most of them do it, but because Fox invented it they will invariably take the blame. For the record I don’t watch any of those stations, MSNBC, CNN, FOX…

      You won’t hear any disagreement from me about the health care law: I hate it. I don’t agree that anyone should be forced to buy a product from a private, for profit company as a condition of living in America.

      I think our for-profit health care industry has become a black eye on this country. Doctors should just stand up and say “No more.” I’m tired of middlemen (insurance companies) getting between me and my doctor. It’s getting to the point where I don’t know if my doctor prescribed this or that because he wants to make money, or if he’s afraid of being sued.

      It has to stop.

      Imagine if doctors united, stood up and looked the insurance companies and the trial lawyers in the face and said “No more.”

      I think another problem is that we are making medical advances that allow people to live longer, but we have to pump so much pickling solution into them that all we are doing is preserving a brain dead skeleton for an extra 10 years so their estate and health insurance company can be milked dry.

      I see every day people who want expensive health care but don’t want to pay the extra taxes that it costs to keep our Social Security system from imploding due to the strain caused by older people.

      Thanks, Dr. for your service and for weighing in today.

      Maybe we can do a collaboration to explore the idea of doctors reclaiming health care from the leeches of society (lawyers and insurance companies).

  15. I’m with Dr. Dean. I don’t understand the Fox bashing either. In fact, they are the only news organization that seems to not stifle debate.
    (See the firings of Pat Buchanan and, ironically, Juan Williams simply because they expressed opinions that didn’t line up with the political bias of their parent news organizations.)

    IMO, the real issue facing America in 2012 has nothing to do with taxes; that is purely a distraction. The real issue is do we have an electorate that is willing to return our nation back to the original intent of our founding fathers, which put a premium on liberty, individualism, personal responsibility and a limited Federal government that is only allowed the powers specifically defined in the Constitution — or will we continue down the path of that Woodrow Wilson started in 1913 of a large, unencumbered federal government, that engages in social engineering and that can do pretty much what it pleases. In the end, that is the real choice before us — and it’s also the choice that will ultimately determine the tertiary issue of whether our taxes ultimately go up or go down in the long run.

    My $0.02 after taxes.

    • Hey Len. Fox is just an easy target. After the phone hacking scandal in Britain, they will remain a target forever. I don’t watch any of them anymore to be honest.

      I think the answer lies somewhere in the middle. Before 1913 we had robber barons, 6-7 day workweeks, quack medicine, child labor, etc. The massive amount of government regulation we have today, too much in most cases, is a result of the business class’ inability to leave well enough alone.

      Because the private sector cannot do anything ethically, and the public sector cannot do anything efficiently, they are required to find a way to work together. Unfortunately they cannot, and we the people suffer.

      Thanks for stopping by!

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