Andrew Samwick’s New Year’s Plea
Please stop President Bush from claiming that the increases in tax revenues is due to the tax cuts.
To anyone in the Administration who may read this blog, I have one small wish for the new year. Please stop your boss from writing or saying the following:
It is also a fact that our tax cuts have fueled robust economic growth and record revenues.
This is exactly right. There is no economist that has worked for the Bush Administration that has supported this view. Brendan Nyhan has compiled a list of such economists and so far the results have been unanimous, the tax cuts have not brought in more revenue than they have cost. The list includes,
- N. Gregory Mankiw,
- Ed Lazear,
- Robert Carroll,
- Alan D. Viard.
All have worked in the Bush Administration and all hold the same view, that the tax cuts didn’t pay for themselves. Yes, revenues have increased, but that doesn’t necessarily mean that the increase is due to the tax cuts. There is also increased economic activity which is the norm after a recession. Did the tax cuts help keep the recession short/shallow? Probably. Did it help with the recovery? Probably. But would the economy not have recovered without the tax cuts? That is a highly unlikely proposition considering that the Fed also cut interest rates as well and by quite a bit.