The Ed Schultz Fallacy: Ending Bush Tax Cuts Won't Hurt Economy

Higher taxes are good for the economy. That may sound a little bizarre, but according to a talking head at MSNBC, higher taxes will pave the way to economic prosperity.


During MSNBC’s Aug. 2 daytime coverage, liberal radio talker and host of MSNBC’s “The ED Show” Ed Schultz argued just that. According to Shultz, there’s “no proof” that allowing the Bush tax cuts to expire next year would hurt the economy.


“I just don't believe that allowing these tax cuts to continue on is going to make the economy any better,” Schultz said. “And the Republicans have been absolute masters at dodging that question. They make the theory, they make the case that if the Bush tax cuts are extended, that the economy is going to get better. There's no proof of that. But then they also say that the economy's going to go further in the tank if they don't get the economic policy that they want.


But as Conn Carroll pointed out on the Heritage Foundation’s blog Aug. 2, raising these taxes would hit small businesses – which are essential for an economic recovery.


“Research on the last seven recessions shows that small businesses generate about two out of every three new jobs during recoveries,” Carroll wrote. “Hitting small businesses with tax increases would kill this job growth.”


But Schultz trotted out another fallacy – that former President Bill Clinton’s tax rates propelled the economic boom of the 1990s.


“Was it idiotic to create 22 million jobs when these tax rates were in place during the Clinton years?” Schultz said. “Why doesn't Sarah Palin ever talk about outsourcing and American jobs going overseas? That's the soft underbelly of the Republicans right now and the Democrats are going to have to expose their talking heads on the right that they don't have an answer for that.”


As J.D. Foster pointed out in a paper for Heritage, it wasn’t the tax hikes during the Clinton years that aided the economy, but the tax cuts he implemented that really pushed the economy.


“Economic growth was solid but hardly spectacular in the years immediately following the 1993 tax increase,” he wrote. “The real economic boom occurred in the latter half of the decade, after the 1997 tax cut. Low taxes are still a key to a strong economy.


Nonetheless, Schultz made it partisan and accused the Republicans in Congress of thwarting the so-called progressive agenda, despite the Democratic Party having majorities in both chambers of Congress and a willing Democratic-controlled White House.


“I think Speaker Pelosi has been speaking the truth on a lot of things lately,” Schultz said. “I think when you look at creating jobs, you have to find a mechanism or a way to get the money to small businesses. Meantime, the Republicans, all they want to do is continue on with the money flowing to the top and the concentration of wealth. And I'm at a loss as to what the Republicans think they're going to be able to go home and say they have done for the last 18 months other than block absolutely everything and protect the wealth at what they have done so well off.”