During speeches about the economy, President Bush has said, “You cut taxes and the tax revenues increase.” Bush delivered a slight variation of this claim today:
One of the benefits of keeping taxes low and growing your economy is that you end up with more tax revenues in the federal treasury. I know that seems counterintuitive to some people.
Henry Paulson, Bush’s nominee to be Treasury Secretary, disagrees. Paulson told the Senate Finance Committee today, “As a general rule, I don’t believe that tax cuts pay for themselves.” (Federal Reserve Chairman Ben Bernanke also argued recently that “under normal conditions, tax cuts do not wholly pay for themselves.”)
Bush is getting better advice. Now all he needs is a better economic policy.