Sen. Mitch McConnell's statement that the Bush tax cuts increased government revenue has already been rebutted and refuted by the Congressional Budget Office, the Committee for a Responsible Federal Budget, the Joint Tax Committee, the Brookings Institution, and many of President Bush's own economists. But here's another thought:
If conservative lawmakers are so certain that tax cuts always lead to higher government revenues, then why were the Bush tax cuts so small? Why only bring the top marginal rate down to 35 percent if bringing it down to 25 percent (or 10 percent!) would inevitably grow government revenue and give us more money to pay for stuff like wars and Social Security? The reason, of course, is that it's very difficult to find a respected economist who believes this stuff. Mitch McConnell is not an idiot. He can't possibly believe it, either.
The operative word in the term Laffer Curve is, as Ezra notes, curve. One of side of the curve, Laffer postulated, tax cuts increase revenue. On the other side, tax cuts decrease revenue. Most economists agree that further tax increases might fuel some additional economic activity. But almost all economists I've read agree that the additional economic activity would not be enough to increase the spending power of the government.
It occurs to me that Sens. Mitch McConnell and Jon Kyl are pushing similar arguments -- pass the Bush tax cuts -- with opposite conclusions. Kyl thinks the tax cuts should be offset with spending cuts. It's your classic Starve the Beast strategy: cut revenues to pressure lawmakers to cut spending. But if McConnell truly believes that tax cuts will make the government rich, he's not suggesting that we starve anything. It's a brave new paradigm, something like: Grow the Beast .. With Starvation!
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