Last week, a handful of Republicans tried to claim — despite overwhelming evidence to the contrary — that tax cuts inevitably pay for themselves, so the $678 billion extension of the Bush tax cuts for the wealthiest 2 percent of Americans does not have to be offset. At the same time, Senate Republicans are standing pat against a $33 billion extension of unemployment benefits, because they say that it is too expensive.
As Center for American Progress Action Fund analyst Michael Linden wrote, “Senate Republicans unanimously opposed extending jobless aid one day, citing concern over the deficit, but then turn right around and push for huge tax cuts for the very richest people in the country, which would cost more than 20 times as much.” And this crazy double-standard is also being espoused by the GOP’s candidate for Senate in Florida.
Marco Rubio appeared on Chuck Todd and Savannah Guthrie’s MSNBC show today to say that an extension of jobless benefits must be paid for, but that extending the Bush tax cuts for the wealthy does not. “They will be paid for because they create economic growth,” he said:
RUBIO: I would vote for [a jobless benefits extension] if it’s paid for. You’d have to show how its going to be paid for and I think Republicans have been working to do that in Washington and certainly I would be part of trying to find that. […]
GUTHRIE: So you mentioned that you want the unemployment extension to be paid for. Would you take that principle to other issues? For example, there’s talk, of course, among Republicans that the Bush tax cuts for the wealthiest of Americans should be extended, but it sounds like there’s not necessarily a plan to pay for those. Would you draw the line there?
RUBIO: Well, let’s understand what the bigger picture is and it’s about the debt. […] We definitely need growth if we want to pay down the debt, and that’s why you need policies like making permanent the ’01 and ’03 tax cuts.
TODD: Okay, but I’m confused, would you support them if they were not paid for, if they were not balanced out by spending cuts?
RUBIO: Well, the question is they will be paid for because they create economic growth, especially in the long-term.
However, as the Center on Budget and Policy Priorities has pointed out, the claim that tax cuts inevitably pay for themselves “is contradicted by the historical record.” Even President Bush’s own economists don’t believe that tax cuts are free, as Andrew Samwick, Chief Economist for the Council of Economic Advisers in 2003–2004, said that “no thoughtful person believes that this possible offset [the Bush tax cuts] more than compensated for the first effect of these tax cuts. Not a single one.” Edward Lazear, Chair of the Council of Economic Advisers in 2007 added, “I certainly would not claim that tax cuts pay for themselves.”
As Paul Krugman wrote, “the notion that tax cuts pay for themselves has no empirical support. And yet the GOP leadership — which claims to be oh so worried about the deficit — is willing to stake America’s solvency on its belief that tax cuts are free.” In fact, the path of revenues following the Bush tax cuts is “pretty much what you would have expected if the Bush cuts had no supply-side effect at all.”
Cross-posted on The Wonk Room.