John McCain's straight talk on taxes

I missed this a few weeks ago -- some straight talk on taxes and revenue from the newly resurgent John McCain (via Steve Benen):

[W]hen he came to the Globe Wednesday, McCain took refuge in a supply-side myth: the notion that President Bush's tax cuts have created a compelling revenue surge.

Queried about funding programs like expanded healthcare for children by letting some of the Bush tax cuts expire, McCain replied, "I would suggest that most economists agree that there was an increase in revenues . . . associated with the tax cuts." Letting those tax cuts expire might actually have the opposite effect on revenues, the Republican presidential candidate warned.

Asked specifically about the idea that tax cuts pay for themselves, McCain said that "a lot of economists" believe the Bush tax cuts had stimulated the economy and that without them, "the economy would not have boomed, and therefore you would not have seen these increases in revenues."

His campaign later insisted McCain didn't mean that tax cuts pay for themselves. But the notion that tax cuts somehow leave the federal government with as much revenue - or nearly as much - as it would have had without them is a popular one in the Republican universe.

I love the claim that "McCain didn't mean that tax cuts pay for themselves." Obviously he was trying to leave that impression; why else would he say what he did?

On a related note, Matthew Yglesias recently claimed that "Mitt Romney, presumably under Greg Mankiw's influence, has always carefully refrained from saying he thinks cutting taxes increases revenue." This is false, however:

“If you lower taxes enough, you create more growth,” Romney said in a video excerpt on his Web site from a closed-door presentation he made to the Club for Growth, a political organization that favors low taxes, in March 2007.

“And if you create growth, you get more jobs,” Romney continued. “You get more jobs, more people are paying taxes. You get more taxes paid, the government has more money by charging lower tax rates.”

Indeed, as I've shown, Rudy Giuliani has made similar claims (here, here and here), as have McCain (here and here), Romney, and Fred Thompson (here and here). We're still waiting for word from Mike Huckabee...

Comments

[Rob]

Mike Huckabee doesn't have time for advanced economics. He's still rasslin' with evolution.

[David]

One ought to be careful with quantifiers. To say that a principle worked in one set of circumstances is not to imply that it will always work.

McCain said that the Bush tax cuts arguably paid for themselves. That's pretty plausible, given that tax revenues have risen under the lower Bush tax rates.

But, that doesn't mean that McCain thinks that all tax cuts will pay for themselves.