Sen. Alexander: The Bush Tax Cuts Are Free, But Obama’s Tax Cuts Cost Money

A handful of Republican lawmakers have tried to claim recently that extending all of the Bush tax cuts, including those for the wealthiest two percent of Americans, is free. “Continuing the [Bush] tax cuts isn’t a cost,” said Sen. Tom Coburn (R-OK). “It doesn’t score anything to continue them.”

Of course, back in the real world, Republicans designed the Bush tax cuts to expire at the end of this year, so relative to current law it costs more than $3 trillion over ten years to extend all of them. Extending the cuts for the richest two percent of Americans alone costs $830 billion.

Some Republicans, like Senate Majority Leader Mitch McConnell (R-KY), attempt to wish away this cost by claiming that revenues increase when taxes are cut (even though all of the data indicates otherwise). But Sen. Lamar Alexander (R-TN) has taken the tax absurdity to new heights, claiming that extending the Bush tax cuts is free, but President Obama’s latest proposal to cut business taxes by permanently extending the research and development tax credit may cost too much money:

Alexander, the chairman of the Senate Republican Caucus, said GOP lawmakers will consider Obama’s latest proposal to provide a research and development tax credit for businesses. But such a tax credit should come only after the White House agrees to extend the Bush tax cuts, including those on those earning more than $250,000 a year.

“The first thing we need to do is to make sure that we don’t raise taxes (by allowing the Bush tax cuts to expire at the end of the year),” Alexander said. “That is going to take most of September. Then we can turn our attention to seeing if we have money to reduce taxes.”

There are two problems with this. First, Alexander is clearly willing to hold the R&D credit hostage until he gets hundreds of billions in tax cuts for the rich (since Obama and the Democrats have already made it clear that they plan to extend the Bush tax cuts for the middle class). But second, why do we have to extend the Bush tax cuts for the wealthy before deciding whether or not we can afford the business tax credit?

Permanently extending the R&D credit will cost about $100 billion over ten years, and the administration said that it intends to (at least partially) pay for it by closing other tax loopholes. When you boil it down, Alexander is saying that we have to wait and see “if we have money” for $100 billion in research and development, but should be spending $830 billion on the very richest Americans without a second thought.

This dichotomy has been at play when it came to other measures aimed at alleviating the pain of the Great Recession. For instance, the same Republican lawmakers who said that extending $33 billion worth of unemployment benefits was too expensive also pushed to extend all of the Bush tax cuts. But they rarely, if ever, did so in consecutive sentences.