rssMcConnell: Bush Tax Cuts Paid for Themselves
Wednesday, July 14, 2010 at 9:01 am
- 18 Comments
A few days ago, Sen. Jon Kyl (R-Ariz.) termed unemployment benefits — a federal insurance system paid for by employers — a “necessary evil” and said that tax cuts should not need to be offset, but benefits extensions should.
Today, speaking with Talking Points Memo’s Brian Beutler, Sen. Mitch McConnell (R-Ky.) doubled down. “That’s been the majority Republican view for some time,” he said. “That there’s no evidence whatsoever that the Bush tax cuts actually diminished revenue. 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.”
This is factually incorrect, and Democrats should be all over this today. Tax cuts do not pay for themselves. Every dollar of tax cuts by making the Bush cuts permanent stimulates an additional 30 cents or so of economic activity. Unemployment insurance does not pay for itself, but it comes much closer. Every dollar of unemployment benefits stimulates around $1.60 of economic activity. Moreover, no economist on earth would say that tax cuts do not need to be offset, but spending increases do; in terms of the budgetary bottom line, there is no difference.
Here is a chart from Karl Smith, a professor of economics and government at the University of North Carolina, Chapel Hill, at the blog Modeled Behavior, showing the impact of the $1 trillion Bush tax cuts:
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18 Comments
Pingback posted July 14, 2010 @ 9:10 am
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Pingback posted July 14, 2010 @ 10:15 am
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Pingback posted July 14, 2010 @ 11:10 am
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Pingback posted July 14, 2010 @ 11:31 am
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Pingback posted July 14, 2010 @ 12:56 pm
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Comment posted July 14, 2010 @ 1:59 pm
I agree with the gist of this (and know that the Bush cuts are costing hundreds of billions per year), but that chart is misleading. Much of the dip in revenue between 2000 and 2003 was because of the recession in the US. You'd see that this isn't unprecedented if the plot didn't start right after the recession during Bush I's term. The chart implies that Bush's cuts cost $750 billion/year circa 2007. They cost a lot, but not that much.
Pingback posted July 14, 2010 @ 3:21 pm
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Comment posted July 14, 2010 @ 3:07 pm
Allowing derivatives and all manner of financial secondary paper to expand from $100 trillion at the start of the Bush Administration, out to $750 trillion as he left office, pumped the economy instead of tax cuts. The Bush years created massive debt larger than anyone can now settle. So the GOP now say we can only afford half a National Government. Get our money back, tax the rich before they buy up the whole thing.
Comment posted July 14, 2010 @ 3:48 pm
SOMEONE TELL MITCH THAT 1700B IN TAX CUTS FOR RICH CREATED
6000B OF DEBT
31,000 NET NEW JOBS OR LOWEST SINCE HOOVER.
CARTER 218,000–REAGAN 175,000-CLINTON 237,000
THEN 31,000 IS A SUCCESS????.
TAKE 1800B BUDGT TO 3600B A SUCCESS??
DEBT FROM 5700B TO 11.900B A SUCCESS?.
MITCH NEEDS TO GO OFF THAT KENTUCKY MOONSHINE!!
cswinney2@triad.rr.com
Pingback posted July 14, 2010 @ 4:55 pm
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Pingback posted August 9, 2010 @ 5:16 pm
[...] people from striving to earn more, so tax cuts pay for themselves, Sen. Mitch McConnell (R-Ky.) argues. (Notably, this is wrong at the United States’ level of taxation, meaning the United States [...]
Pingback posted October 31, 2010 @ 2:58 pm
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