Wednesday, June 15, 2011

Tim Pawlenty is a supply side wizard

Given that he is a Republican its not surprising that Pawlenty believes that tax cuts increase revenue. That belief is Republican dogma. So even if in the back of his head where logic and reason reside he believes the facts which say tax cuts don't increase revenue he can't say that in public for other Republicans to hear.

Speaking of the evidence, here is Brendan Nyhan compiling a list of Bush appointed economist rebuking Bush's own claims that tax cuts increase revenue and thus pay for themselves:
-In the 2003 Economic Report of the President, CEA wrote that "[a]lthough the economy grows in response to tax reductions... it is unlikely to grow so much that lost tax revenue is completely recovered by the higher level of economic activity."

-During his 2003 Senate confirmation hearings to replace Hubbard as CEA chair, Greg Mankiw was asked about Club for Growth president Stephen Moore's opposition to his nomination. Mankiw responded that Moore was criticizing "a passage [in Mankiw's writing] where I had raised skepticism about claims that tax cuts would generate so much employment growth as to be completely self-financing. And I remain skeptical of those claims."

-A Treasury Department analysis contained in the Office of Management and Budget's 2006 Mid-Session Review concludes that the tax cuts will not pay for themselves in even the most optimistic scenario. As the Center on Budget and Policy Priorities writes, Treasury found that "making the President's tax cuts permanent — and paying for the tax cuts with future reductions in spending — may ultimately increase the level of economic output (national income) in the long run by as much as 0.7 percent... Even if an increase in the level of economic output of 0.7 percent ultimately were to result from making the tax cuts permanent, the effect of this assumed additional economic growth would be to offset only a tiny fraction of the cost of the President's tax cuts."

-As stated above, CEA Chair Ed Lazear told the Washington Times in September 2006 that "We do not say that the tax cuts pay for themselves."


That's not just someone like Paul Krugman saying that. Its Bush's own economists. The fact that Pawlenty and the rest of the GOP are still repeating Bush's false claim about tax cuts shows how deeply intrenched their beliefs in taxes are.

On the other hand, Obama is not such a doctrinaire liberal that he can't see the value of a tax cut, nor the cost of one. Word is that he is trying to get a payroll tax cut for employees and employers as part of the debt ceiling negotiations. Obviously that will drop revenue a bit, as did his resigning the Bush tax cuts. But I don't recall him claiming those things would increase revenue. He simply did it because we are in the middle of a crappy economy and it can give it a small boost.

Obama has taken the good with the bad. Bush and Republicans want to (in Jonathan Bernstein's words) have dessert all the time. But in reality they are shoveling shit down their own and our mouths and acting like its ice cream. Its a trick they have mastered that trick quite well.

No comments:

Post a Comment