President Bush claimed yesterday that recent revenue growth proves that cutting taxes reduces the deficit:
Some in Washington say we had to choose between cutting taxes and cutting the deficit. You might remember those debates. You endured that rhetoric hour after hour on the floor of the Senate and the House. Today's numbers show that that was a false choice. The economic growth fueled by tax relief has helped send our tax revenues soaring. That's what's happened.
But as CBPP points out, this claim, which has been repeated over and over by the administration since 2001, is false -- indeed, it is disproven by the administration's own analysis in the Mid-Session Review released yesterday:
The Treasury analysis concludes 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... [T]he effect of this assumed additional economic growth would be to offset only a tiny fraction of the cost of the President's tax cuts. For instance, a 0.7 percent increase in the economic output that the Congressional Budget Office has projected for 2016 would represent an additional $146 billion. If new revenues equaled as much as 20 percent of the additional output, the increase in revenues resulting from making the tax cuts permanent (assuming Treasury’s best-case assumptions) would be $29 billion. That amount represents less than 10 percent of the $314 billion that the Joint Committee on Taxation estimates extending the tax cuts will reduce revenues in 2016...
In short, even Bush's own economists don't believe this nonsense.
Does that sound familiar? It should -- I wrote the same thing twice at Spinsanity. First, in February 2003, I showed that the 2003 Economic Report of the President "directly contradicts a number of public statements by the President and other administration officials on two key economic issues: the effects of tax cuts on revenue and the relationship between budget deficits and interest rates." Then, in May 2003, I described how "President Bush is again being contradicted by [his Council of Economic Advisers] and his nominee for chairman of the council, N. Gregory Mankiw, on the date a recession began in 2001, the revenue effects of tax cuts and the number of jobs that would be created by his tax cut package."