In Giuliani ad fact-check, Kurtz asserted "fierce dispute among economists" on tax cuts and revenues, but cited only one economist

››› ››› NIKI JAGPAL

In an analysis of Rudy Giuliani's new campaign ad, Howard Kurtz asserted that Giuliani's claim that "reducing taxes produces more revenues" is "a matter of fierce dispute among economists." As evidence of this dispute, Kurtz provided the opinion of only one economist, Larry Kudlow, who agreed with Giuliani's assertion. But a day before Kurtz's analysis appeared in print, a Washington Post editorial had quoted Edward Lazear, chairman of President Bush's Council of Economic Advisers, stating, "I certainly would not claim that tax cuts pay for themselves." Several other current or former Bush administration officials have also disagreed with the assertion that tax cuts produce more revenue.

In a November 29 post on The Washington Post's The Trail blog, Post media critic Howard Kurtz offered an analysis of a new campaign advertisement being run in New Hampshire by Republican presidential candidate Rudy Giuliani, asserting that Giuliani's claim that "reducing taxes produces more revenues" is "a matter of fierce dispute among economists." But as evidence of this "dispute," Kurtz provided the opinion of only one economist, Larry Kudlow, who agreed with Giuliani's assertion. From Kurtz's post, which was also published in the print edition of the paper on December 2:

Giuliani's insistence that tax-cutting "produces more revenues" is the supply-side gospel first preached by Ronald Reagan, and a matter of fierce dispute among economists. Indeed, Giuliani invokes National Review and conservative commentator Larry Kudlow to validate the claim. The former mayor did cut taxes and tame the New York bureaucracy, but slightly increased the number of city employees during his tenure.

By depicting his Democratic rivals as big taxers, Giuliani is looking past his Republican opponents and trying to appeal to economic conservatives who may disagree with his moderate stance on social issues.

Kurtz could have pointed out that numerous current and former Bush administration economists and officials have stated the opposite -- that tax cuts do not bring in revenue. For instance:

  • Treasury Secretary Henry M. Paulson said during his June 2006 confirmation hearing, "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."
  • According to a November 15 Post editorial, Office of Management and Budget director Jim Nussle recently told reporters, "Some say that [the tax cut] was a total loss. Some say they totally pay for themselves. It's neither extreme."
  • In 2006, The New York Times quoted N. Gregory Mankiw, Harvard University economics professor and former chairman of the Council of Economic Advisers under Bush, stating that " 'most economists' don't believe that tax cuts increase tax revenues for the government." The Times continued: "Mankiw writes: '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.' "
  • In an October 17, 2006, article, the Post quoted Alan D. Viard, a former Council of Economic Advisers senior economist under Bush, saying 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."

Indeed, on December 1, a day before Kurtz's analysis appeared in print, The Washington Post published an editorial, "Mr. Giuliani and the Tax Fairy," stating:

"I know that reducing taxes produces more revenues," Republican presidential candidate Rudolph Giuliani declares in a new television ad launched Thursday. "Democrats don't know that. They don't believe it."

There's a good reason for that: It's not true. Produces more revenue than what? Than if taxes had not been cut? No -- and no matter how many times Republican politicians caught up in the thrill of supply-side thinking pronounce that tax cuts pay for themselves, they cannot will it to be correct.

You don't have to turn to Democrats to refute this point; just read the studies and comments by Republican economists, including many from the Bush administration. President Bush's Treasury Department, analyzing the "dynamic" effects of making the Bush tax cuts permanent, found that even under favorable assumptions, the positive economic impact would make up for no more than 10 percent of the tax cuts' cost.

The editorial went on to quote Edward Lazear, chairman of Bush's Council of Economic Advisers, stating, "I certainly would not claim that tax cuts pay for themselves." Lazear and several other current or former Bush administration officials have disagreed with the assertion that tax cuts produce more revenue.

The Daily Howler's Bob Somerby also noted the contrast between Kurtz's analysis and the Post's editorial:

This may very well be the Dumbest Ad Watch Ever. Indeed, Kurtz's assessment is especially striking, given the semi-decent editorial the Post had published just one day before. The headline on the editorial said this: "Mr Giuliani and the Tax Fairy." The editors discussed that same inane claim.

[...]

The editorial ... quotes a string of Bush Admin honchos as they debunk that famous claim. But so what? The very next day, Kurtz dragged the crackpot Kudlow out of the bushes and insisted there's a "fierce dispute among economists" about what Rudy said.

In his new ad, "Promise," Giuliani states:

GIULIANI: When I became mayor of New York City, things were out of control. I lowered taxes. I reduced the growth of government, made government more accountable, and New York City boomed. I would do these things for America because I know they work. I know that reducing taxes produces more revenues. Democrats don't know that. They don't believe that. Hillary Clinton, Barack Obama, John Edwards -- here's a promise I assure you they'll keep. They are making the promise to raise taxes. The only thing I can tell you in addition to that is, they'll raise taxes even more than they promised. I'm Rudy Giuliani, and I approve this message.

From Kurtz's November 29 "Ad Watch" analysis:

The ad, airing in New Hampshire, is accurate -- but selective -- in saying that the three Democratic contenders would raise taxes. What Giuliani leaves out is that Clinton, Obama and Edwards have pledged to repeal the Bush tax cuts only for the wealthiest Americans -- Clinton pegs the level at over $250,000 in income, Obama at $200,000 -- while keeping the reductions for everyone else. The assertion that they will raise taxes even more is purely speculative.

Giuliani's insistence that tax-cutting "produces more revenues" is the supply-side gospel first preached by Ronald Reagan, and a matter of fierce dispute among economists. Indeed, Giuliani invokes National Review and conservative commentator Larry Kudlow to validate the claim. The former mayor did cut taxes and tame the New York bureaucracy, but slightly increased the number of city employees during his tenure.

By depicting his Democratic rivals as big taxers, Giuliani is looking past his Republican opponents and trying to appeal to economic conservatives who may disagree with his moderate stance on social issues.

Posted In
Economy, Taxes
Network/Outlet
The Washington Post
Person
Howard Kurtz
Stories/Interests
2008 Elections
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