Senate Minority Leader Mitch McConnell yesterday repeated the all-too-common claim that tax cuts increase government revenue:
That's been the majority Republican view for some time... [t]hat 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.
However, as I've repeatedly pointed out, virtually every credible economist disagrees. Even Bush administration economists repeatedly found the courage to disavow the claims of their political superiors -- here's a review:
-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."
Presumably these people are not biased against conservatives or tax cuts. And yet their findings and conclusions are ignored, and the magical thinking persists.
Update 7/15 6:29 AM: Derek Thompson at The Atlantic compiled a similar list, which includes these additional quotes:
2) The chair of CEA from 2003-2005, Greg Mankiw: "Some supply-siders like to claim that the distortionary effect of taxes is so large that increasing tax rates reduces tax revenue. Like most economists, I don't find that conclusion credible for most tax hikes, and I doubt Mr. Paulson does either."
3) He's right! Hank Paulson, Bush's last Treasury Secretary, doesn't: "As a general rule, I don't believe that tax cuts pay for themselves."
4) That opinion was shared by Andrew Samwick, Chief Economist on Council of Economic Advisers, 2003-2004: "No thoughtful person believes that this possible offset [the Bush tax cuts] more than compensated for the first effect for these tax cuts. Not a single one."...
5) ... and Edward Lazear, chair of the Council of Economic Advisers in 2007: "I certainly would not claim that tax cuts pay for themselves."