Fox economic analyst Stuart Varney claimed that the Bush tax cuts are not responsible for current deficits and that revenue to the government increased once the tax cuts were implemented. In fact, experts agree the Bush tax cuts have contributed to current deficits, and even Bush administration economists have admitted that federal revenue is lower than it would have been without the tax cuts.
On the September 26 edition of Fox & Friends, Stuart Varney appeared on the show and attempted to exonerate the Bush-era tax cuts by reviving the false claim that the tax cuts increased revenue.
VARNEY: He's also saying that it was the Bush tax cuts that created the deficits that we have today. I disagree with that profoundly. Number one, those tax cuts are 10 years old. Number two, when they were put in place in '01 and '02, revenues to the government, to the Treasury, went straight up, allowing us to cut our deficit to only a 167 billion in 2007.
But the economic consensus points to the Bush tax cuts as being one of the primary factors behind current deficits. A report by the Center on Budget and Policy Priorities (CBPP) graphed the effects of Bush's policies on current and future deficit projections:
The Center for American Progress (CAP) concluded that almost two-thirds of the fiscal shortfall for 2009 and 2010 could be attributed to either Bush's policies or the economic downturn. CAP wrote that “the single most important factor is the legacy of President George W. Bush's legislative agenda. ... [W]e estimate that the tax cuts passed during the Bush presidency are reducing government revenue collections by $231 billion in 2009.”
Varney's claim that the Bush tax cuts increased government revenues has also been debunked. Revenue as a share of the economy fell during the Bush administration. The Economic Policy Institute noted that the “decade of the Bush tax cuts has, on average, lower revenue levels as a share of the economy than any previous decade since the 1950s.”
- Alan Viard, senior economist at the Council of Economic Advisers during Bush's first term, was quoted saying, “Federal revenue is lower today than it would have been without the tax cuts. There's really no dispute among economists about that.”
- Robert Carroll, then the deputy assistant secretary for tax analysis at the U.S. Treasury, was quoted saying, “As a matter of principle, we do not think tax cuts pay for themselves.”
- Andrew Samwick, George W. Bush's first term chief economist at the Council of Economic Advisers wrote in a 2007 blog post: “You know that the first order effect of cutting taxes is to lower tax revenues. We all agree that the ultimate reduction in tax revenues can be less than this first order effect, because lower tax rates encourage greater economic activity and thus expand the tax base. No thoughtful person believes that this possible offset more than compensated for the first effect for these tax cuts. Not a single one.”
Varney regularly makes erroneous and outlandish economic claims. He championed fiscal austerity despite experts' roundly condemning austerity measures as ineffective and economically deleterious. Varney has also baselessly speculated that the U.S. Treasury was “buying votes with taxpayer money.” Varney's often flawed economic analysis runs hand-in-hand with his relentless cheerleading of Republicans, as well as his inflammatory attacks against President Obama.