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View Diary: Obama vs. Bush - A Comparison of Debt/Deficit Creation (55 comments)

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  •  Politicians not economists make those claims (0+ / 0-)

    No Bush Administration economist ever claimed that tax cuts paid 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."

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

    Robert Carroll, deputy assistant Treasury secretary for tax analysis under Bush, "said neither the president nor anyone else in the administration is claiming that tax cuts alone produced the unexpected surge in revenue. 'As a matter of principle, we do not think tax cuts pay for themselves,' Carroll said."


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