Sen. Coburn Admits Tax Cuts Don’t Stimulate The Economy?

During CBS’ GOP town hall on the economy, which aired this morning, Sen. Tom Coburn (R-OK) claimed that only $46 billion of the roughly $800 billion Recovery Act meaningfully stimulated the economy:

COBURN: First of all, every dollar the federal government spends doesn’t get the same bang for the buck in the economy. […] So if we’re going to spend money as the federal government we ought to spending it where we get an economic multiplier of two or three dollars. The problem with the stimulus bill, there was only $46 billion out of almost $900 billion that actually had any productive change in terms of economic multiplier.

Watch it:

While Coburn didn’t specify what that $46 billion was spent on, it was likely a reference to $46 billion in transportation spending inserted by the Senate. Either way,it’s clear what he was not referring to — tax cuts. At the demands of conservative lawmakers, $288 billion in tax cuts and benefits were included in the Recovery Act. These tax breaks accounted for over a third of the entire package, but apparently Coburn didn’t see them as very stimulative, as there’s no way he was referring to the tax cuts, which were six times larger than his $46 billion figure.


But Coburn is absolutely right. At the the time the Recovery Act was being debated, many economists warned against devoting too much of the package to tax cuts because their stimulative effect is far smaller than that of federal spending. For every dollar the government spends on tax cuts (except for payroll tax cuts, which were included in the Recovery Act), it generates less than one dollar in economic growth. But for every dollar in government spending on things like highway construction, up to $2 dollars or more is created in economic growth.

Coburn’s critique of the stimulus is surprising, as it sounds more like that of liberal economist Paul Krugman than one of the Senate’s most conservative members. But his assertion that tax cuts don’t stimulate the economy is even more startling, consider that the GOP’s entire economic plan relies on that assumption. Coburn is a devout follower, if not a high priet, in this conservative tax cutting “theology,” but perhaps the cuts in the Recovery Act don’t count since they went to working families and small businesses, instead of the wealthy and corporations.


A spokesperson confirms to ThinkProgress that Coburn was referring to the $46 billion for transportation funding.