cross posted at http://retiregarrett.com
Scott Garrett would have you believe tax cuts don’t need to be paid for because they pay for themselves in the form of additional revenue to the Treasury generated by the expanded economic growth. Unfortunately that’s simply not the case.
Ronald Reagan used that logic in the 1980’s when he slashed taxes primarily for the wealthy arguing that money left in the hands of job creators would lead to an expanded economy. Such an expanded economy would create new jobs and generate so much revenue for the Treasury that the tax cuts would pay for themselves. The federal deficit increased 189% during the 8 years of the Reagan Presidency. In actual dollars, the deficit went from $992 Billion to $2.8 Trillion. George H.W. Bush was correct when he opposed this strategy labeling it “Voodoo Economics.” “Trickle Down” economics became the punch line to jokes across the country and even Ronald Reagan’s Director of OMB, David Stockman blamed the ever-expanding deficit on the Reagan tax cuts.
George H.W. Bush’s son obviously never listened to his father; for if he had he would not have made the same baseless argument that tax cuts pay for themselves. The Bush tax cuts of 2001 and 2003 were not paid for because Republicans told us there was no need as these cuts would pay for themselves. The real cost of the Bush tax cuts so far has been an additional $2.485 Trillion to the deficit from 2001 to 2010.
Alan D. Viard, a former Bush Jr. White House economist said “Federal revenue is lower today than it would have been without the tax cuts. There’s really no dispute among economists about that.” “It’s logically possible” that a tax cut could spur sufficient economic growth to pay for itself, but there’s no evidence that these tax cuts would come anywhere close to that.”
Edward Lazear, President George W. Bush’s chair of the Council of Economic Advisers, said “I certainly would not claim that tax cuts pay for themselves,” In testimony before the Senate Budget Committee “State of the Economy and the Budget”, September 28, 2006, Lazear stated:
To determine the effect of tax cuts on revenue, we need to ask, “What would revenues have been absent these cuts?” This question can be answered by providing estimates of what revenue would have been had we not cut taxes…Will the tax cuts pay for themselves? As a general rule, we do not think tax cuts pay for themselves. Certainly, the data [we have] presented above do not support this claim.
On June 27, 2006 then Treasury Secretary to President George W. Bush, Hank Paulson said “I don’t believe tax cuts pay for themselves.” Shortly after the 2003 Bush Tax cuts, the President’s own Council of Economic Advisors issued a report stating that although they believed the tax cuts would grow the economy, they did not believe it would generate enough tax dollars to offset the cuts.
Scott Garrett wants you to believe that he knows more than these accomplished and accredited republican economists. He can point to no conclusive evidence to make his case; rather he feels it in his gut.
No one here is a fan of taxes and we don’t know anyone who is. But we’d rather have our representative in Congress tell us the truth than try to deceive us into believing that we can have our cake and eat it too. Governing means making tough decisions based upon the best available information possible and treating people with respect by leveling with them.
The Phrase etched outside the National Archives reads “The Past is Prologue.” We take this to mean we need to learn the lessons of the past so they are not repeated going forward. Scott Garrett wants us to forget what we learned during the Bush years and go back to providing tax cuts for the wealthy without paying for them and hoping that things turn out differently this time.