Last Sunday, Sen. Jon Kyl (R-AZ) caused quite a stir when he claimed that the government should “never” offset tax cuts, yet unemployment insurance extensions must be paid for. “You should never have to offset cost of a deliberate decision to reduce tax rates on Americans,” he said.
Today on C-Span, Sen. Tom Coburn (R-OK) circled the wagons around his Senate colleague. When host Greta Brawner asked Coburn about a Washington Post editorial mocking Kyl’s statement, Coburn conceded that tax cuts cost money, but he claimed that extending the Bush tax cuts won’t cost anything, because, according to Coburn’s logic, they’ve already been enacted at one point in the past:
COBURN: Continuing the [Bush] tax cuts isn’t a cost, if you added new taxes, new tax cuts, I would agree that’s a cost. It’s not a cost. That’s where we are today. That’s the baseline. It doesn’t score anything to continue them. It costs money if we increase, which I would be willing to do. I think we ought to cut corporate taxes.
Other Republicans such as California Senate candidate Carlie Fiorina have jumped on the “tax cuts don’t cost anything” bandwagon. Even Senate Minority Leader Mitch McConnell (R-KY) came to Kyl’s defense yesterday, laughably arguing that there is “no evidence whatsoever that the Bush tax cuts actually diminished revenue.” “They increased revenue because of the vibrancy of these tax cuts in the economy,” he said. Except, there is evidence that tax cuts diminish revenue, as the Washington Post’s Ezra Klein noted:
[H]ow about the Congressional Budget Office’s estimations? “The new CBO data show that changes in law enacted since January 2001 increased the deficit by $539 billion in 2005. In the absence of such legislation, the nation would have a surplus this year. Tax cuts account for almost half — 48 percent — of this $539 billion in increased costs.” How about the Committee for a Responsible Federal Budget? Their budget calculator shows that the tax cuts will cost $3.28 trillion between 2011 and 2018.
Indeed, various independent analyses have found that extending the Bush tax cuts would cost the federal government anywhere between $678 billion and $3 trillion over the next ten years. And the simple fact is tax cuts don’t “increase revenue” as McConnell claimed, even many of the Minority Leader’s conservative colleagues agree — such as former Treasury Secretary Henry Paulson, economist Douglas Holtz-Eakin, and Bush Council on Economic Advisers chairs Edward Lazear and Greg Mankiw. Tax cuts only “partially offset the losses in revenues,” Fed chairman Ben Bernanke has said.