In a photo opportunity with his economic team today, President Bush used the new deficit numbers to again suggest that tax cuts increase revenue:
You know, last February, it was projected that our deficit would be $244 billion, and today the Director informed us that the deficit -- actual deficit is $163 billion. In other words, as a result of the hard work of the American people, this economy is growing; the growing economy has yielded more tax revenues than anticipated. And because of fiscal restraint, those tax revenues went to reduce our deficit.
The deficit today is at 1.2 percent of GDP, which is lower than the average of the last 40 years. In other words, we have told the American people that by keeping taxes low we can grow the economy, and by working with Congress to set priorities we can be fiscally responsible and we can head toward balance. And that's exactly where we're headed.
The accompanying White House fact sheet is even more direct:
As a percentage of the economy, the deficit is now lower than the average of the last forty years. Tax cuts work to promote economic growth, and that economic activity brings in higher revenues to the Federal treasury. This year tax revenues grew by $161 billion to reach $2.568 trillion, the highest level of Federal revenues ever recorded. That's an increase of 6.7 percent. And it builds on the 14.5 percent and 11.8 percent increase in revenues during the last two years.
The key to this tactic, as we pointed out at Spinsanity in 2003, is Bush's strategically ambiguous rhetoric, which typically suggests tax cuts increase revenue without making a direct claim:
Bush plays on two facts: tax cuts are likely to stimulate some growth in the economy, and a growing economy will produce more tax revenue at a constant level of taxation. By repeating the phrase "more revenues coming into the Treasury" alongside a push for his tax cut, Bush implies a link between tax cuts and increased government revenues.
Of course, even administration economists reject this suggestion, but why should Bush stop making it? He's done so successfully for years without serious challenge from the press (see here, here, and here for more). As a result, most of the GOP presidential candidates are making similar claims.
Update 10/11 9:10 PM: For an example of how bad press coverage of these claims has become, check out this "he said"/"she said" classic from the AP:
While the administration contends that Bush's first-term tax cuts helped jump-start economic growth and are contributing to record revenues currently, Democrats dispute that view, saying the tax breaks were tilted to the wealthy and actually have contributed to the record deficits.
Is the sky up or down? Views differ!