House Republicans Try to Enshrine Bullshit that Tax Cuts Pay for Themselves

[Bill USA]

Citizens for Tax Justice

House Republicans passed a bill earlier this month to force Congress’s non-partisan tax analysts to assume that tax cuts cause less revenue loss (or even increase revenue) because they improve the economy so much.

The Pro-Growth Budgeting Act of 2011 would require Congress’s Joint Committee on Taxation (JCT), the non-partisan organization that estimates the revenue impacts of tax proposals, to include the economic feedback effect of tax cuts into their revenue estimates. Republicans call this “dynamic scoring” and often call the estimating process in use now “static scoring.” The truth is that JCT currently does take into account the behavioral effects of tax changes, but not any effects on the overall size of the economy, which usually would be small and nearly impossible to predict accurately.

[font color="red"]The real point of the bill is to give some sort of respectability to an idea that no mainstream economists believes in — that tax cuts can partially pay for themselves or can even increase revenue.[/font] For example, Senate Minority Leader Mitch Connell is fond of claiming that the Bush tax cuts did not lead to any decrease in revenue.

As Citizens for Tax Justice’s Bob McIntyre points out, even the Bush Administration Treasury, which was packed with “appointees who profess a deep affection for Bush’s tax-cutting policies,” found in 2006 that extending the Bush’s tax cuts would have essentially no beneficial effect on the economy over the long term, and would certainly not pay for themselves.
(more)

Bush Treasury dismisses 'Supply-side economics'

For decades, most Republican politicians have treated as an
article of faith that tax cuts, especially tax cuts for the
rich, will “pay for themselves” through improved
economic growth and resulting higher revenues. Critics
deride this implausible belief as “voodoo economics” or “the
free lunch theory.” Its adherents prefer to call it “supply-side
economics.”

Oddly, the same GOP politicians who think tax cuts augment
revenues also fervently hold exactly the opposite position,
which they call “starve the beast.” They insist that big tax cuts
will so sharply reduce revenues that they will force steep cuts in
government programs.

The apostle of these conflicting dogmas was President Ronald
Reagan back in the 1980s. On the one hand, Reagan claimed
that the way to stop Congress from providing what he saw as
excessive public services was to “cut off their allowance.” On
the other hand, he also promised that he would pay for his huge
increase in defense spending “with the revenues generated by
the [even huger] tax cuts” he pushed through Congress in 1981.
As it happened, of course, neither theory panned out.

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...(the Bush) Treasury’s study found that extending Bush’s tax
cuts would have essentially no beneficial effect on the U.S.
economy at all. But, the report casually implies, it could have
grave consequences for the ability of our government to deliver
the public services that Americans depend upon.