Rep. Dreier's Fantasy: "Empirical Evidence" Proves That Extending Bush Tax Cuts Won't Increase Deficit
For months, Republican lawmakers have struggled to explain why they are fighting to spend hundreds of billions of dollars on high-income tax cuts, but not willing to pay for immediate relief to help small businesses and the unemployed. Today, as the House considers an extension of tax cuts for 98 percent of Americans, Rep. David Dreier (R-CA) revived one of the most wrongheaded Republican arguments, suggesting that the continuation of tax breaks on income above $250,000 won't actually cost the government a penny:
DREIER: And so why don't we use empirical evidence that will prove that we can take a course that will get this economy back on track? Now, my friend says that we have a cost of $700 billion if we fail to increase taxes on those small businesses and those who are upper-income wage earners. A $700 billion cost is what is claimed. In fact, if you talk to economist after economist, as I have, that is in fact not the case. Just yesterday, a prominent economist met with a number of members of this body, pointing to the fact that if you do — if you do, Mr. Speaker, actually keep those taxes low, we will actually see an increase in the flow of revenues to the federal treasury.
The "prominent economist" with whom several House Republicans met yesterday is Art Laffer, who invented the prized conservative theory that tax cuts actually lead to higher revenues by accelerating economic growth. But if Dreier wants to talk about "empirical evidence," he needs not look any further than the past decade. In fact, the very Bush tax cuts that Republicans are desperate to maintain precipitated exploding deficits and "the slowest average annual job growth since World War II."
Despite conservative protestations, many leading economists agree that tax cuts for the wealthy do little to stimulate the economy, undermining the foundation for Dreier's argument. Looking back, even the conservative Heritage Foundation has reluctantly admitted that the Bush tax cuts "played some role in keeping revenues below their historical average." Similarly, incoming House Majority Leader Eric Cantor (R-VA) conceded that under the Republican plan, "Certainly you're going to dig the hole deeper."