Senator Jon Kyl, Republican of Arizona and Senate Minority Whip, insists that extended unemployment benefits, which his party has been filibustering, be paid for through tax increases or spending cuts. What about renewing the Bush tax cuts, a Republican goal that mostly benefits the wealthy? Those need not be paid for, according to the GOP. Minority leader Mitch McConnell (R-KY) offers a novel explanation:
...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."
The Bush tax cuts increased revenue? Paul Krugman compares the Clinton and Bush years and finds that McConnell is not entitled to his own facts:
We’ve now been through two two-term administrations, one of which raised taxes, the other of which cut them. Which looks like it presided over a more vibrant economy?
And who in their right mind would describe the Bush economy as “vibrant”, anyway? Even during the peak of the housing bubble, it never achieved the kind of job growth that was routine in the Clinton years.
Oh, and as for revenue: we have a growing economy, which means that revenue tends, other things equal, to rise over time. But here’s what real federal revenue looked like since 1992:
Rapid, steady growth in the Clinton years; much less thereafter, even if you stop the clock just before the housing bubble burst.
In short, the notion that tax cuts pay for themselves has no empirical support. And yet the GOP leadership — which claims to be oh so worried about the deficit — is willing to stake America’s solvency on its belief that tax cuts are free.
Update: Also, for those readers who complain that I’m too partisan, that I should admit that there are two sides to the issues, this is a prime example of my problem. How am I supposed to pretend that these are serious people? The facts really do have a well-known liberal bias.