In their quest to extend the Bush tax cuts for the wealthiest two percent of Americans, many leading Republicans have invented a fantasy world in which tax cuts always pay for themselves through increased economic growth. Extending the Bush tax cuts for the rich would cost $830 billion in lost revenue over the next ten years, but nonetheless, Sen. Jon Kyl (R-AZ) claimed, “You should never have to offset cost” of tax cuts, while Sen. Judd Gregg (R-NH) said, “tax cuts should not have to be offset.” Senate Minority Leader Mitch McConnell (R-KY) went a step further, falsely claiming that the Bush tax cuts have actually “increased revenue.”
But on CNBC today, Rep. Paul Ryan (R-WI), the ranking GOP member on the House Budget Committee, splashed some cold water on that delusion, saying dismissively, “I’m not one of these people who says that say that all tax cuts pay for themselves”:
ZANDI: Congressman, the president has proposed allowing the tax rates for upper income individuals to rise back to where they were in the 1990s, the CBO says that’s going to cost $700 billion over the next ten years. Do you those estimates are correct?
RYAN: I actually, I don’t think they’re correct. … But the CBO just gave us a report, Mark, the other day, that said that if we allow these top tax rates to expire, it’s going to cost us 1.25 million jobs next year, it’s going to shave off a full percentage point off of GDP, and it’s going to slow down the economy.
QUICK: But Paul, you just quoted the CBO on those numbers, but disagreed with them on the others. Where did CBO get it wrong on the other numbers?
RYAN: Well, on the revenues, because I believe you’ll get faster economic growth. Look, I’m not one of these people who says that all tax cuts pay for themselves, but tax cuts on the margins is where the growth occurs. And that does make a difference.
Ryan has received tremendous praise from his GOP colleagues for his supposed policy knowledge and economic smarts. Former Alaska Gov. Sarah Palin called Ryan “sharp,” while former House Speaker Newt Gingrich labeled him “extraordinarily formidable,” and House Minority Leader John Boehner (R-OH) touted that Republicans, “led by Congressman Paul Ryan, have already identified $1.3 trillion in specific spending cuts.” Indeed, Paul is absolutely correct that tax cuts don’t always pay for themselves.
However, his smarts didn’t stop him from contradicting himself seconds before that moment of lucidity in the CNBC interview. As host Becky Quick pointed out, Ryan quoted the Congressional Budget Office approvingly when their numbers supported his argument, but questioned their estimates moments earlier when they did not fit his narrative.