In the president’s first term, John McCain was unusually responsible when it came to taxes. When Bush’s costly 2001 tax cuts went to the floor, McCain was one of two Senate Republicans to vote “no.” He said at the time, “I cannot in good conscience support a tax cut in which so many of the benefits go to the most fortunate among us at the expense of middle-class Americans who need tax relief.” Two years later, another tax-cut bill came to the floor, and McCain again voted against it, citing a rising deficit.
That was then. Now that he’s running as a conservative presidential candidate, the Arizona senator who’s been flip-flopping all over the place, has come to believe the worst of the Republicans’ economic nonsense.
[When McCain] came to the [Boston] Globe Wednesday, McCain took refuge in a supply-side myth: the notion that President Bush’s tax cuts have created a compelling revenue surge.
Queried about funding programs like expanded healthcare for children by letting some of the Bush tax cuts expire, McCain replied, “I would suggest that most economists agree that there was an increase in revenues . . . associated with the tax cuts.” Letting those tax cuts expire might actually have the opposite effect on revenues, the Republican presidential candidate warned.
Asked specifically about the idea that tax cuts pay for themselves, McCain said that “a lot of economists” believe the Bush tax cuts had stimulated the economy and that without them, “the economy would not have boomed, and therefore you would not have seen these increases in revenues.”
So, the tax cuts that he opposed weren’t costly because they increased revenues. Oh my.
“It is amazing to me that people have treated this as though it is a debatable point, because it is really not,” says economist Dean Baker, co-director of the Center for Economic and Policy Research. “It is one of the most extensively researched topics in economics, and virtually all the research has concluded that there is no way that any growth stimulated through an income tax cut can replace the revenue lost.”
McCain knows this; he has to. And yet, he assumes, probably correctly, that the truth might cost him Republican primary votes, so he’s stuck repeating economic gibberish in the hopes that conservative activists will be sated by nonsense.
How very sad.
Just to be clear, this isn’t even controversial. It’s not like some serious, credible economists think this is possible. Many have started to call this right-wing idea belief in the “Tax Fairy,” in part because it’s just so fantastical.
Here’s CBO’s conclusion, from a summary by then-director Douglas Holtz-Eakin, a well-regarded conservative economist: “…You are not going to get tax cuts to pay for themselves.”
That’s a laudably honest economic answer.
Holtz-Eakin is interesting for several reasons. Prior to his stint at CBO, he spent 18 months as chief economist for George W. Bush’s Council of Economic Advisers.
And now? Well, one of the hats he currently wears is that of a senior policy adviser for John McCain’s presidential campaign.
Apparently, McCain’s not listening — at least to reality.
I’m also reminded of this recent WaPo editorial.
Tax cuts don’t pay for themselves. This might sound like dog-bites-man news, except for one thing: This rather unremarkable statement comes from Jim Nussle, the new director of the Office of Management and Budget in an administration whose president is given to saying things like “You cut taxes, and the tax revenues increase” (February 2006) and “We have cut taxes, causing economic growth, which caused there to be this year alone 187 billion more tax dollars coming into the Treasury” (August 2007).
As Mr. Nussle acknowledges, “There are those including myself who . . . in the passion of the argument have made statements — I think I even made a statement once — that tax relief did pay for itself.”
Maybe someone should send McCain a copy.