WP editorial: A Heckuva Claim: Bush is oblivious to the consequences of his tax cuts.

[DeepModem Mom]

A Heckuva Claim
Mr. Bush is oblivious to the consequences of his tax cuts.
Saturday, January 6, 2007

PRESIDENT BUSH wrote in a Wall Street Journal op-ed Wednesday that "it is also a fact that our tax cuts have fueled robust economic growth and record revenues." The claim about fueling record revenue is flat wrong, and it is shocking that the president should persist in making such errors. After all, tax cuts are the central plank of his domestic policy. How can he fail to understand the basic facts about them?

This is not just our opinion. Harvard's N. Gregory Mankiw, an economic conservative who served as chairman of Mr. Bush's Council of Economic Advisers, has tested the hypothesis on which Mr. Bush's claim is based: He looked at the extent to which tax cuts stimulate extra growth and the extent to which that growth generates extra tax revenue that offsets the initial loss of revenue from the tax cut. Mr. Mankiw's conclusion: Even over the long term, once you've allowed all of the extra growth to feed through into extra revenue, cuts in capital taxes juice the economy enough to recoup half of the lost revenue, and cuts in income taxes deliver a boost that recoups 17 percent of the lost revenue. So a $100 billion cut in taxes on capital widens the budget deficit by $50 billion, and a $100 billion cut in income taxes widens the budget deficit by $83 billion.

If Mr. Bush does not believe Mr. Mankiw, perhaps he may believe the Congressional Budget Office. In a period when it was run by Douglas Holtz-Eakin, another economic conservative who worked in Mr. Bush's White House, the CBO estimated the extent to which a 10 percent reduction in personal taxes might pay for itself. On the most optimistic assumptions it could muster, the CBO found that tax cuts would stimulate enough economic growth to replace 22 percent of lost revenue in the first five years and 32 percent in the second five. On pessimistic assumptions, the growth effects of tax cuts did nothing to offset revenue loss.

If Mr. Bush believes neither Mr. Mankiw nor the Congressional Budget Office, he should at least respect his own Treasury. Prodded by the White House, Treasury economists have calculated how much extra growth would result from making the Bush tax cuts permanent. They have concluded that economic output would rise by about 0.5 percent in the first six years and by an additional 0.2 percent in the "long term." Since the federal government collects around 18 percent of gross domestic product in taxes, enlarging GDP by 0.7 percent would result in extra tax revenue equivalent to 0.13 percent of GDP. That would offset less than a tenth of the revenue that would be lost because of the tax cuts....

http://www.washingtonpost.com/wp-dyn/content/article/2007/01/05/AR2007010501801.html?nav=most_emailed

[Ezlivin]

1. Bush is right

His "tax cuts have fueled robust economic growth and record revenues."

Unfortunately that statement only applies to a handful of his rich cronies and other blue bloods.

[Tanuki]

8. Maybe * was referring to China! n/t

[Auntie Bush]

9. Rich revenues to all those making millions and billions in the

Military industrial complex.

[GuvWurld]

2. Editorial Policy

How nice of the WaPo to contradict *. But isn't it true that most or all newspapers have guidelines for submission of opinion pieces, and among these is invariably that factually inaccurate statements will not be published? Also, how can the newspaper possibly have verified the authenticity of the writer's authorship? It is no secret that politicians employ speech writers. Hooray for the WaPo calling bullshit but they shouldn't have subjected us to the propaganda in the first place. *'s original submission should have been stamped "REJECTED" and sent back with "Reality" as the return address.

On edit: I was confused that it was the WSJ that published the piece and WaPo who called them on it. My statement above was based on the incorrect assumption that WaPo ran the piece then panned it.

[NMDemDist2]

3. the WSJ editorial page is a RW shill rag

they were probably one of the few papers what would accept it

[malaise]

4. Bush is an ignorant moron.

He has long dismissed facts or conclusions drawn from empirical evidence.

Bush is all the proof an intellectual needs for the skewed thought process of the intelligent design posse.

Add word.

[Captain Hilts]

5. Just when I'm about to completely lose faith in the WP's op-ed page...nt

[hfojvt]

6. earth to WaPo

How about going directly to the truth? Forget Mankiw's study, which was completely redundant given our experience in the 1980s anyway.

The claim about fueling record revenues is just flat wrong because we do NOT have record Income tax revenues!!!! Income tax revenues fell after Bush and Republicans cut income taxes. FICA tax revenues have continued to grow at about 6 to 7% because of increases in the population and automatic increases in the cap. Can WaPo not tell people that, instead of clouding the air with studies and estimates and projections, oh my?

http://journals.democraticunderground.com/hfojvt

[DeepModem Mom]

7. Thanks for this link to your journal entry, hfojvt! nt

[indepat]

10. If W believes the largest of his own whoppers, then he is truly delusional

[ItsTheMediaStupid]

11. Short version: Supply side economics are a known fraud. Saying anything else is lying

They produced record defecits under King Ronald in the 1980's and they are doing the same thing now.

OTOH, appropriately targeted tax increases, like Clinton's in 1993 can increase revenues and by calming fears of defecits, boost confidence in the stock and bond markets. Of course, Gingrich, Dole and the other RW mouthpieces of the day predicted doom and gloom after the Clinton tax increase and they were completely wrong.

Why the democrats don't constantly pound the R's on these lies is beyond me.

[Rex]

12. The CBO, the GAO, no one can tell the Emperor that he is running

around in public stark nekked! It is as if Chimpy believes his very words alter reality.