The 9 Biggest Conservative Lies About Taxes and Public Spending
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It’s difficult to know where to begin deconstructing conservative rhetoric on taxes and spending. It's such a central part of their worldview, and yet it's a view informed by a whole slew of falsehoods that have been repeated again and again during this year's debates over the Bush tax cuts, public spending and the deficit. What follows are nine of the biggest fact-free whoppers that conservatives insist are true.
1. Cutting Taxes Leads to More Money for the Government
Conservatives can't say they oppose popular programs on ideological grounds, and they can't admit they're happy to run up huge budget deficits, so they've come up with the fiction that cutting taxes actually brings in more revenues to finance the public sector.
What's especially brazen about this is that it's usually preceded by debate-stifling phrases such as “as everyone knows,” “history shows us” or “every single time taxes have been cut.”
In 2007, Sen. John McCain, R-Arizona, said, “Tax cuts, starting with Kennedy, as we all know, increase revenues”; Sen. Kay Bailey Hutchinson, R-Texas, claimed that “Every major tax cut we've had in history has created more revenue," and Senate Minority Leader Mitch McConnell, R-KY said earlier this year that the myth represented “the view of virtually every Republican on that subject."
It's also complete nonsense, and it's worth noting that only conservative politicians and pundits make the claim -- economists across the ideological spectrum agree that the argument is cursed by voodoo math.
As Time Magazine's Justin Fox noted in 2007, "Every economics Ph.D. who has worked in a prominent role in the Bush administration acknowledges that the tax cuts enacted during the past six years have not paid for themselves—and were never intended to.” Harvard professor Greg Mankiw, a former chairman of Bush’s Council of Economic Advisers, dedicated a whole section of his economics textbook to debunking the claim.
And in an opinion column in the Wall Street Journal responding to Bush's claim that "You cut taxes, and the tax revenues increase," Andrew Samwick, who served as chief economist on Bush’s Council of Economic Advisers, wrote, “You are smart people....You know that the tax cuts have not fueled record revenues... You know that the first order effect of cutting taxes is to lower tax revenues.”
2. Conservatives' Favorite Economist Proves the Point
As I note in my book, The Fifteen Biggest Lies About the Economy, that falsehood is based in large part on an abuse of “Laffer’s curve,” the conservative media’s favorite economic theorem. The idea, first scribbled on a cocktail napkin by economist Arthur Laffer (according to lore), is pretty simple. It holds that you can raise income taxes to a degree, but when the top tax rate exceeds a certain point, people will go to such extraordinary lengths to avoid paying the piper that the government will actually end up collecting less revenue.
When Dylan Matthews asked a number of experts where the Laffer Curve “bends” for the Washington Post, the economists (he asked some conservative opinion columnists as well) all agreed that a top rate of 50 percent – several went as high as 70 percent – would still fall below the curve. That's important to keep in mind as we debate the merits of letting the top rate return to the 39 percent that prevailed during the Clinton years.
Each time taxes have been cut in the past few decades, it's led to a drop in revenues, which is why people like McCain like to go back to the Kennedy era, when cutting the top rate did spur growth and bring more money into the government's coffers. What they don't mention is that Kennedy cut the top rate from 91 percent to 70 percent, which has no bearing on the debate we're having today.*