Mitch McConnell must be trying to piss me off:
“There’s no evidence whatsoever that the Bush tax cuts actually diminished revenue,” he told Brian Beutler of TPMDC. “They increased revenue because of the vibrancy of these tax cuts in the economy. So I think what Senator Kyl was expressing was the view of virtually every Republican on that subject.” In other words, this is why Republicans don’t think tax cuts need to be paid for. They pay for themselves.
Let me be clear about two things. Two facts, and I emphasize the word facts.
1. In terms of pure budget considerations a $1 spent in tax cuts is THE EXACT SAME THING as a $1 spent on government spending.
2. Tax cuts…DO NOT PAY FOR THEMSELVES. Under no circumstances do tax cuts increase tax revenue.
Ezra Klein breaks it down as simple as it can get:
There’s an ontological question here about what, exactly, McConnell considers to be “evidence.” But how about the Congressional Budget Office’s estimations? “The new CBO data show that changes in law enacted since January 2001 increased the deficit by $539 billion in 2005. In the absence of such legislation, the nation would have a surplus this year. Tax cuts account for almost half — 48 percent — of this $539 billion in increased costs.” How about the Committee for a Responsible Federal Budget? Their budget calculator shows that the tax cuts will cost $3.28 trillion between 2011 and 2018. How about George W. Bush’s CEA chair, Greg Mankiw, who used the term “charlatans and cranks” for people who believed that “broad-based income tax cuts would have such large supply-side effects that the tax cuts would raise tax revenue.” He continued: “I did not find such a claim credible, based on the available evidence. I never have, and I still don’t.”
Anyone who’s even a casual reader of this blog has a plethora of research to support this position. Even Arthur Laffer, who originated the idea of tax cuts to increase revenue long ago claimed this idea to be bunk.
NOTE: And before anyone says something along the lines of “well tax cuts increase the economy because people spend money”, remember that almost every ounce of research shows that direct government spending has a bigger effect on the economy.