Sen. Gillibrand Accidentally Makes the Case for Bush Tax Rates

Lachlan Markay / July 12, 2011

Sen. Kirsten Gillibrand, D-NY, is determined to convince Americans that the Bush-era tax rates have directly resulted in job losses for New Yorkers. To that end, she recently published a series of bullet points purporting to show the effect of those tax rates on employment in nine regions of New York State.

Her unspoken premise is that the economic benefits of the Bush tax rates should be judged based on the employment they did or did not produce. More generally, Gillibrand is assuming that the economic trends that follow a given policy can be fairly attributed to that policy – she’s assuming causation and dismissing correlation, in other words.

With those implied premises in mind, here are the statistics that Gillibrand offered in a recent press release:

Across the state, more than 330,000 more New Yorkers have gone unemployed since the Bush-era tax cuts for the wealthy were established…

• In New York City, since the Bush tax cuts were enacted in 2001 there are approximately 150,000 more people unemployed.
• In Western New York, since the Bush tax cuts were enacted in 2001 there are approximately 20,000 more people unemployed.
• In the Rochester-Finger Lakes region, since the Bush tax cuts were enacted in 2001 there are approximately 20,000 more people unemployed.
• In Central New York, since the Bush tax cuts were enacted in 2001 there are approximately 20,000 more people unemployed.
• In Southern Tier, since the Bush tax cuts were enacted in 2001 there are approximately 9,000 more people unemployed.
• In the Capital Region, since the Bush tax cuts were enacted in 2001 there are approximately 20,000 more people unemployed.
• In North Country, since the Bush tax cuts were enacted in 2001 there are approximately 10,000 more people unemployed.
• In the Hudson Valley, since the Bush tax cuts were enacted in 2001 there are approximately 40,000 more people unemployed.
• On Long Island, since the Bush tax cuts were enacted in 2001 there are approximately 50,000 more people unemployed.

At first glance those numbers look damning, but the key lies in the way Gillibrand frames them. Yes, there are more than 330,000 more unemployed Americans now than there were in June 2001, when the Bush-era tax rates went into effect. But quite a few things have happened since then: the largest terrorist attack in the country’s history, three overseas wars, and the worst economic slump since the Great Depression, to name a few.

Controlling for the latter, we see that Gillibrand’s methodology – gauging the economic value of a policy based on raw employment numbers – shows the undeniable success of the Bush tax rates in creating jobs for New Yorkers.

Statewide, and in every region Gillibrand mentions but one, overall employment increased from June 2001 to August 2008 (the beginning of the recession). During that period, according to data from the New York State Department of Labor,

• Employment statewide increased by 559,400,
• Employment in New York City increased by 273,500,
• Employment in Western New York increased by 6,700,
• Employment in the Finger Lakes Region increased by 3,300,
• Employment in Central New York increased by 9,700,
• Employment in the Capital Region increased by 33,500,
• Employment in the North Country region increased by 9,300,
• Employment in the Hudson Valley increased by 71,800,
• Employment on Long Island increased by 86,400,
• And employment in the Mohawk Valley Region, which Gillibrand neglected to include, increased by 6,300.

The only region in which overall employment decreased during this period was the Southern Tier, which saw about 800 fewer people employed in August 2008 than in June 2001.

In other words, assuming as Gillibrand does that the Bush tax rates were directly responsible for the state of the economy, measured by overall employment numbers, after their implementation, those rates in fact produced notable prosperity throughout New York State.

Unless Gillibrand thinks it took seven years for those tax rates to have any effect on the economy, her statistics are meaningless, since they fail to account for the very obvious fact that unemployment has increased since late 2008 due to the massive economic downturn in which the country finds itself.

If Gillibrand is really determined to judge a policy based on the raw numbers of employed persons in her state – rather than, say, the unemployment rate, which accounts for changes in the size of the workforce – then so be it, but doing so does not strengthen her case for raising taxes to pre-Bush era rates.