Fact Checking The Sunday Shows - August 8, 2010

August 09, 2010 10:02 am ET

On Sunday's Meet the Press, Reps. John Boehner (R-OH) and Mike Pence (R-IN) dodged repeated questions about the cost of extending the Bush tax cuts. Both indirectly suggested that government doesn't need to pay for tax cuts. There is a clear consensus among economists across the political spectrum that tax cuts don't pay for themselves, and that letting tax cuts swell deficits is, in a Bush adviser's words, "just future taxes." Rep. Boehner also suggested Social Security is unsustainable, and Gov. Mitch Daniels (R-IN) agreed on Fox News Sunday. In fact, Social Security is solvent through 2037, and the shortfall thereafter is fairly small. Elsewhere, Tony Perkins told Face the Nation viewers that the Prop. 8 decision ignored the impact of no-fault divorce laws on marriage, when in fact the ruling specifically addressed the subject.

Meet the Press

CLAIM: Rep. John Boehner (R-OH) Claimed The Idea That Tax Cuts Increase Deficits Is A "Washington Game"

DAVID GREGORY (host): But do you agree that tax cuts cannot be paid for— but tax cuts are not paid for, is that correct?

REP. JOHN BOEHNER (R-OH): I am not for raising taxes on the American people in a soft economy.

GREGORY: That's not the question, Leader Boehner. The question is, are tax cuts paid for or not?

REP. BOEHNER: Listen what you're trying to do is get into this Washington game, uh, and their funny accounting over there. You cannot get the economy going again by raising taxes on those people who we expect uh to create jobs in America and to get the economy going again. If we wanna solve the budget problem, we've gotta have a healthy economy, and we have to get our arms around the runaway spending that's going on in Washington, D.C.

GREGORY: I just wanna clarify this, I mean if you— I'm relying on what Chairman Greenspan said, maybe if you're accusing him of funny Washington games. He says that tax cuts that aren't paid for are not, they are not cutting the deficit, that they are not actually paid for, it's borrowed money. And so do you believe that tax cuts pay for themselves or not?

REP. BOEHNER: I do believe that we've gotta get more money in the hands of small businesses and American families to get our economy going again. Uh, and the only way to get our economy going again is to do that and to get our arms around the spending.

CLAIM: Rep. Mike Pence (R-IN) Suggested That Tax Cuts Pay For Themselves Rather Than Adding To The Deficit

DAVID GREGORY (host): Right, but I just wanna be clear. So if you want more tax cuts, you would be very specific in saying how they would be offset with spending cuts as well, since they will not be paid for. You acknowledge, tax cuts being extended cannot be paid for, it would be borrowed money.

REP. MIKE PENCE (R-IN): Well no, I— I— I don't acknowledge that. The reality is, I think it's apples and oranges. It's something John Boehner was talking to you about. Here in Washington, D.C. they talk about tax cuts the same way they talk about spending increases, as though the govt owned all of the money. They say, "are they paid for?" Well I think, I think deciding on a government spending increase is very different on whether or not we allow the American people to keep more of their hard-earned tax dollars.

FACT: Expert Consensus Is That Tax Cuts Do Not Pay For Themselves

Time: "If There's One Thing That Economists Agree On, It's That These Claims Are False." According to Time: "If there's one thing that Republican politicians agree on, it's that slashing taxes brings the government more money... If there's one thing that economists agree on, it's that these claims are false. We're not talking just ivory-tower lefties. Virtually every economics Ph.D. who has worked in a prominent role in the Bush Administration acknowledges that the tax cuts enacted during the past six years have not paid for themselves--and were never intended to. Harvard professor Greg Mankiw, chairman of Bush's Council of Economic Advisers from 2003 to 2005, even devotes a section of his best-selling economics textbook to debunking the claim that tax cuts increase revenues." [Time, 12/6/07, emphasis added]

Architect Of Bush Tax Cuts: Tax Cuts Without Budget Offsets Are Really "Future Taxes." According to Bloomberg: "You won't find a truer believer in the big tax cuts of the George W. Bush era than Glenn Hubbard, the 51-year-old economist who is dean of Columbia Business School. The Republican academic was instrumental in designing the tax cuts, first as a Bush campaign insider and then as the president's first chief economic adviser. The idea behind the cuts, enacted in 2001 and 2003, was to encourage work, savings, and investment, thus stimulating long-term economic growth. Hubbard is especially proud of the 2003 cut in taxes on dividends and capital gains, which he calls 'the most pro- growth tax reform that anybody did since Kennedy.' Now that the Bush tax cuts are up for renewal -- they expire on Dec. 31 unless Congress acts -- Hubbard has a queasy feeling about them, Bloomberg Businessweek reports in its Aug. 8 issue. The cuts, he says, have been undermined by years of deficits. Until the trajectory of spending changes, he says, 'deficits are just future taxes. You're just talking about taxes today vs. taxes tomorrow.'" [Bloomberg.com, 8/5/10, emphasis added]

2006: Bush's Chief Economic Adviser Conceded Tax Cuts Do Not Pay For Themselves. In testimony to the Senate Budget Committee, Council of Economic Advisers Chairman Edward Lazear testified: "Will the tax cuts pay for themselves?  As a general rule, we do not think tax cuts pay for themselves.  Certainly, the data presented above do not support this claim." [Senate Budget Committee Hearing, 9/28/06, via WhiteHouse.Archive.gov]

American Enterprise Institute (AEI) Economist: "There's No Evidence" That Bush Tax Cuts "Come Anywhere Close" To Paying For Themselves. In 2006, the Washington Post asked former Bush economist and AEI Resident Scholar Alan Viard if the Bush tax cuts paid for themselves: "Economists said Bush was claiming credit where little is due. The economy has grown and tax receipts have risen at historic rates over the past two years, but the Bush tax cuts played a small role in that process, they said, and cost the Treasury more in lost taxes than it gained from the resulting economic stimulus. 'Federal revenue is lower today than it would have been without the tax cuts. There's really no dispute among economists about that,' said Alan D. Viard, a former Bush White House economist now at the nonpartisan American Enterprise Institute. 'It's logically possible' that a tax cut could spur sufficient economic growth to pay for itself, Viard said. 'But there's no evidence that these tax cuts would come anywhere close to that.'" [Washington Post, 10/17/06, emphasis added]

Wall Street Journal: Bush Tax Cuts Return Less Than 10% Of Their Cost In Added Tax Revenue From Economic Growth. In a 2006 editorial, the Wall Street Journal wrote: "The congressional Joint Committee on Taxation, using conventional analyses, says making the president's tax cuts permanent would reduce federal revenues in 2016 by $314 billion. That is more than 10 times what the Treasury analysis suggests tax cuts would generate by prompting more hours of work, more savings and investment and more efficient use of resources." [Wall Street Journal, 7/11/06]

FactCheck.org: "Highly Misleading" To Say Tax Cuts Increase Revenues. According to FactCheck.org: "Republican presidential candidate Sen. John McCain has said that the major tax cuts passed in 2001 and 2003 have 'increased revenues.' He also said that tax cuts in general increase revenues. That's highly misleading. In fact, the last half-dozen years have shown us that we can't have both lower taxes and fatter government coffers. The Congressional Budget Office, the Treasury Department, the Joint Committee on Taxation, the White House's Council of Economic Advisers and a former Bush administration economist all say that tax cuts lead to revenues that are lower than they otherwise would have been - even if they spur some economic growth. And federal revenues actually declined at the beginning of this decade before rebounding." [FactCheck.org, 6/11/07]

  • Nonpartisan Joint Committee On Taxation: Bush Tax Cuts Reduced Revenues By Hundreds Of Billions Of Dollars. According to FactCheck.org:

The Joint Committee on Taxation estimated that the 2001 tax legislation (the Economic Growth and Tax Relief Reconciliation Act) would cause government revenues to be 107.7 billion less than they would have been in the absence of the legislation in 2004, 107.4 billion less in 2005 and 135.2 billion less in 2006. The committee's estimates for the effect of the Jobs and Growth Tax Relief Reconciliation Act of 2003 were that it would reduce otherwise projected revenues by 148.7 billion in 2004, 82.2 billion in 2005 and 20.7 billion in 2006. The JCT makes its comparisons against the Congressional Budget Office's receipts baselines.

[FactCheck.org, 6/11/07]

Harvard Economist: Chief Republican Arguments For Cutting Taxes Are "Both Wrong." In a paper titled "Snake-Oil Tax Cuts," Harvard professor Jeffery Frankel wrote:

For years, the Republican approach to economic policy has pretty much boiled down to this message: The right response to all problems is cutting taxes. To bolster this message, they rely heavily on two arguments. On the one hand, they say, cutting taxes will increase tax revenues by generating economic growth, thus raising tax revenue and building a surplus. (This is known as the Laffer Hypthesis). On the other hand, Republicans claim, tax cuts are good because they create deficits and force the government to shrink itself. (A colloquial term for this is Starve the Beast).

The arguments are not only mutually exclusive - the weight of the economic evidence also shows that they're both wrong. The habit of Republican policymakers to invoke each of them at different points in time (or before different audiences) is politically convenient but logically dishonest. It smacks of a particularly desperate defense attorney arguing both that "my client didn't have a gun" (Laffer) and "he shot in self-defense" (Starve the Beast).

Neither proposition accurately describes US economic history, nor provides a sound basis for future economic policy. That is, choosing either proposition would harm the long-term health of the US economy.

["Snake-Oil Tax Cuts," 9/8/08, via Harvard.edu, emphasis added]

FACT: Far From Paying For Themselves, The Bush Tax Cuts Created Massive Deficits

CBPP, 2005: Tax Cuts Are Half Of The $539 Billion Increase In Deficits Since 2001. Below is a chart from the Center on Budget Policy Priorities (CBPP) using Congressional Budget Office numbers to trace the origins of the deficit:

[CBPP.org, 1/31/05]

The Bush Tax Cuts Are The Primary Driver Of Federal Budget Deficits Over The Next Decade. Below is a chart from the CBPP showing the deficit impacts of war spending, financial recovery spending, the recession itself, and the Bush tax cuts:

[CBPP.org, 6/28/10]

CLAIM: Governor Mitch Daniels (R-IN) And Rep. John Boehner (R-OH) Claimed That We Can't Pay For Medicare And Social Security As They Currently Exist

REP. JOHN BOEHNER (R-OH): David I think it's time for the American people to have an adult conversation about the problems that we face. Uh, these entitlement programs serve tens of millions of Americans, and they're critically important. But we also know, uh, that these programs, uh, are unsustainable in their current form. [Meet the Press]

GOV. MITCH DANIELS (R-IN): Y'know, you can believe in limited government like I do, or very expansive government as others sincerely do, and still come to the conclusion that arithmetically there's no way we can pay for the Social Security and Medicare systems of today. We are practicing child abuse in a literal sense when we deposit those costs on folks to come. [Fox News Sunday]

FACT: 2010 Report From Social Security Trustees Shows Entitlement Programs Are Solvent For Over 25 Years Despite Economic Downturn

Social Security Trust Fund Is Big Enough To Finance Benefits For Baby Boomers. According to the Economic Policy Institute:

The retirement of the large Baby Boomer generation will cause Social Security spending to increase from 4.8% of GDP in 2010 to 6.1% of GDP in 2035. The Baby Boomer retirement was fully anticipated by Social Security's actuaries and the members of the National Commission on Social Security Reform ("the Greenspan Commission") appointed by President Reagan. As a result of reforms enacted by Congress in 1983 following the commission's report, Social Security is in the process of building up a trust fund that will be large enough to cover benefits through the peak Baby Boomer retirement years.

Though the oldest Baby Boomers became eligible for retirement benefits in 2008, most Baby Boomers are still in the workforce. Around 2025, when the younger Baby Boomers reach retirement age, Social Security will begin drawing down the trust fund. At that point, Social Security's outlays will start to exceed its tax revenues and interest from the trust fund, though the balance of the trust fund will ensure that full benefits can be paid through 2036 or so.

The Social Security trust fund will run out of assets around 2037. If Congress does not act before then to shore up the program's finances, Social Security benefits would have to be cut by an estimated 22% to allow revenues to fully cover benefits. Though such an abrupt cut in benefits should certainly be avoided, the inflation-adjusted value of these benefits would still be larger than current benefits due to economic growth, though they would replace a smaller share of pre-retirement earnings (CBO 2009).

[EPI.org, 8/6/10, parentheses original, emphasis added]

Social Security Trustees: Trust Fund Sufficient To Pay Full Benefits Through 2036, 78 Percent Of Benefits Thereafter. According to the Social Security Board of Trustees: "The projected point at which the combined Trust Funds will be exhausted comes in 2037 - the same as the estimate in last year's report. At that time, there will be sufficient tax revenue coming in to pay about 78 percent of benefits." [SSA.gov, 8/5/10]

FACT: Long-Term Funding Shortfall Is Not As Great As Gov. Daniels And Rep. Boehner Imply

The Post-2037 Funding Shortfall Is Predicted To Be Less Than 1% Of GDP. According to the Economic Policy Institute: "Social Security spending as a share of the economy is projected to decline after the Baby Boomer retirement, leveling off at around 6% of GDP; this is a little more than 1 percentage point above current revenues as a share of GDP. The Social Security actuaries have projected that an increase in revenues equal to just 0.6% of GDP will be sufficient to cover promised benefits over the 75-year planning period because of the savings built up in the trust fund." [EPI.org, 8/6/10, citations removed for clarity]

Face the Nation

CLAIM: Family Research Council President Tony Perkins Claimed The Judge Who Struck Down Prop. 8 In California Ignored No-Fault Divorce Law In His Decision

TONY PERKINS: Now we do have an abundance of evidence over the last 40 years from the social sciences that show us that public policy that has uh devalued marriage through laws such as no-fault divorce has truly impacted children and impacted the institution of marriage. And the judge in his ruling actually over-just ignored all of that, and said that there is no evidence that any of the policy that's been adopted on no-fault divorce and other liberal-leaning policies has impacted marriage. And I think anybody with, with a half a brain can see that the policies that have been adopted in the last 40 years have impacted marriage, and as a result, have impacted children.

FACT: The Judge Mentions No-Fault Divorce Laws In His Ruling

The Judge Held That No-Fault Divorce Laws "Allowed Spouses To Define Their Own Roles Within A Marriage." From page 64 of Judge Vaughn Walker's opinion:

The development of no-fault divorce laws made it simpler for spouses to end marriages and allowed spouses to define their own roles within a marriage.

a. Tr 338:5-14 (Cott: No-fault divorce "was an indication of the shift * * * [that] spousal roles used to be dictated by the state. Now they are dictated by the couple themselves. There's no requirement that they do X or Y if they are one spouse or the other.");

b. Tr 339:10-14 (Cott: The move to no-fault divorce underlines the fact that marriage no longer requires specific performance of one marital role or another based on gender.);

c. PX1319 Hendrik Hartog, Lecture, Marital Exits and Marital Expectations in Nineteenth Century America, 80 Georgetown L J 95, 97, 121 (1991): In nineteenth century America, marriage was permanent, spousal roles were non-negotiable and divorce "punished the guilty for criminal conduct" and "provided a form of public punishment for a spouse who had knowingly and criminally violated his or her public vows of marriage.";

d. PX1308 Betsey Stevenson and Justin Wolfers, Marriage and Divorce: Changes and their Driving Forces, Institute for the Study of Labor at 2-3, Fig 1 (Feb 2007): Current divorce rates are consistent with trends that developed before states adopted no-fault divorce.

[Perry v. Schwarzenegger Decision, accessed 8/8/10 via USCourts.gov, emphasis added]