Glenn Beck guest: "Believe it or not, tax cuts bring in revenue" -- several Bush economists don't believe it
Research ››› ››› NIKI JAGPAL
On CNN Headline News' Glenn Beck, David E. Williams, vice president of policy for Citizens Against Government Waste, asserted that "the tax cuts are ... really what's saving this country right now. ... Believe it or not, tax cuts bring in revenue." However, several Bush administration officials have stated that tax cuts, including those enacted during the Bush administration, produce a net decrease in revenue, including Treasury Secretary Henry M. Paulson, who said during his confirmation hearing, "As a general rule, I don't believe that tax cuts pay for themselves."
On the November 14 edition of his CNN Headline News show, while discussing President Bush's veto of a domestic spending bill on November 13 with David E. Williams, vice president of policy for Citizens Against Government Waste, Glenn Beck said: "[A] liberal called me up on the radio show the other day and they said, 'You people, who are all conservatives, you wanted President Bush's tax cuts, and now look.' It's not the tax cuts. ... It's the Republican spending and now the Democratic spending." Williams replied, "[I]f anything, the tax cuts are ... really what's saving this country right now. ... Believe it or not, tax cuts bring in revenue." Several Bush administration economists, however, have stated that tax cuts, including those enacted during the Bush administration, produce a net decrease in revenue, as Media Matters for America documented. Further, during his confirmation hearing, Treasury Secretary Henry M. Paulson testified: "As a general rule, I don't believe that tax cuts pay for themselves"; and the director of the Office of Management and Budget, Jim Nussle, was more recently quoted as saying, "Some say that [the tax cut] was a total loss. Some say they totally pay for themselves. It's neither extreme."
During his June 26, 2006, confirmation hearing before the Senate Finance Committee, Paulson said: "As a general rule, I don't believe that tax cuts pay for themselves." The financial information website MarketWatch reported this statement as "echoing the opinion of most economists." Paulson added: "But I have clearly seen -- and I think some of those people you've quoted would say the same thing -- I've seen that tax cuts change behavior. There's no doubt."
In a November 15 editorial, titled "The Tax Fairy, Debunked: OMB Director Jim Nussle acknowledges reality," The Washington Post wrote:
Tax cuts don't pay for themselves. This might sound like dog-bites-man news, except for one thing: This rather unremarkable statement comes from Jim Nussle, the new director of the Office of Management and Budget in an administration whose president is given to saying things like "You cut taxes, and the tax revenues increase" (February 2006) and "We have cut taxes, causing economic growth, which caused there to be this year alone 187 billion more tax dollars coming into the Treasury" (August 2007).
As Mr. Nussle acknowledges, "There are those including myself who ... in the passion of the argument have made statements -- I think I even made a statement once -- that tax relief did pay for itself." In fact, Mr. Nussle said yesterday at a breakfast with reporters sponsored by the Christian Science Monitor, "Some say that [the tax cut] was a total loss. Some say they totally pay for themselves. It's neither extreme."
In a June 25 article, The Christian Science Monitor reported that "even top Bush economic advisers now reject" the theory that cutting taxes increases tax revenues, and quoted Council of Economic Advisers chairman Edward Lazear as saying: "I certainly would not claim that tax cuts pay for themselves." Indeed, during his September 26, 2006, testimony before the Senate Budget Committee, Lazear said:
LAZEAR: Will the tax cuts pay for themselves? As a general rule, we do not think tax cuts pay for themselves. Certainly, the data presented above do not support this claim. Tax revenues in 2006 appear to have recovered to the level seen at this point in previous business cycles, but this does not make up for the lost revenue during 2003, 2004, and 2005. The tax cuts were a positive step and have contributed to the enhanced economic growth, additional jobs, higher real disposable income, and the low unemployment rates that we currently see today. Our goal is not to maximize the size of government, but to provide revenues to make sure that we can operate those programs that society deems necessary, while at the same time allowing the private sector to take full advantage of its growth potential.
Similarly, in an October 17, 2006, article, the Post quoted Alan D. Viard, a former Council of Economic Advisers senior economist during the Bush administration, asserting that "[f]ederal revenue is lower today than it would have been without the [Bush] tax cuts. There's really no dispute among economists about that."
Moreover, in the 2005 paper "Dynamic Scoring: A Back-Of-The-Envelope Guide," N. Gregory Mankiw, Harvard University economics professor and former chairman of the Council of Economic Advisers under Bush, wrote: "Most economists ... believe that taxes influence national income but doubt that the growth effects are large enough to make tax cuts self-financing."
From the November 14 edition of CNN Headline News' Glenn Beck:
BECK: David Williams is the vice president of policy for Citizens Against Government Waste. David, I've got to tell you, I'm a citizen, and I think our government is a waste. Help me down off that tree.
WILLIAMS: I can't. I really can't, because the government is wasting a ton of money for ridiculous projects. The Democrats came in last year, into power, into office, and said, "We're going to drain the swamp. We're going to make these huge" --
WILLIAMS: -- "changes in Washington." Yet, a year later, literally a year later, we're back to zero.
BECK: Yeah, and --
WILLIAMS: We're right back to where we were before.
BECK: And here's the frustration if -- you know, look, America, if you're watching this show for the first time, know right out on the front, I'm a conservative. But I'm not a Republican. And here's what people don't say on television. What the hell is wrong with the Republicans? Because the Republicans, this election, will point to all of this pork, and then they'll get right back in, and they'll do it, too. Am I wrong?
WILLIAMS: No, no, absolutely. And that's what happened is the Republicans spent themselves into oblivion --
WILLIAMS: -- between 1994 and 2006. They spent so much money that the Congress, the president, no one was there to say no, because the president signed these spending bills. Congress passed them, and President Bush put his hands over his eyes and signed them.
BECK: Yeah. Somebody -- a liberal called me up on the radio show the other day and they said, "You people, who are all conservatives, you wanted President Bush's tax cuts, and now look." It's not the tax cuts.
WILLIAMS: Oh, no.
BECK: It's the Republican spending and now the Democratic spending.
WILLIAMS: Well, and Glenn, if anything, the tax cuts are -- is really what's saving this country right now --
BECK: I know.
WILLIAMS: -- because it's bringing in the revenue. Believe it or not, tax cuts bring in revenue.
WILLIAMS: It's the spending that's dragging us down.