Tax cuts do NOT pay for themselves. -Alan Greenspan Former Federal Reserve Chairman
Reagan Chief Economist Feldstein: "It's Not That You Get More Revenue By Lowering Tax Rates, It Is That You Don't Lose As Much."
Feldstein In 1986: "Hyperbole" That Reagan Tax Cut "Would Actually Increase Tax Revenue."
Conservative Economist Holtz-Eakin: "No Serious Research Evidence" Suggests Tax Cuts Pay For Themselves."
Bush CEA Chair Mankiw: Claim That Broad-Based Income Tax Cuts Increase Revenue Is Not "Credible," Capital Income Tax Cuts Also Don't Pay For Themselves
Bush-Appointed Federal Reserve Chair Bernanke: "I Don't Think That As A General Rule Tax Cuts Pay For Themselves."
Bush Treasury Secretary Paulson: "As A General Rule, I Don't Believe That Tax Cuts Pay For Themselves."
Bush OMB Director Nussle: "Some Say That [The Tax Cut] Was A Total Loss. Some Say They Totally Pay For Themselves. It's Neither Extreme."
Bush CEA Chairman Lazear: "As A General Rule, We Do Not Think Tax Cuts Pay For Themselves."
Bush Economic Adviser Viard: "Federal Revenue Is Lower Today Than It Would Have Been Without The Tax Cuts."
Bush Treasury Official Carroll: "We Do Not Think Tax Cuts Pay For Themselves."
The historical myth that Reagan raised $1 of taxes in exchange for $3 of spending cuts
The Pinocchio Test
It is time to abandon this myth. Reagan may have convinced himself he had been snookered, but that belief is based on a fundamental misunderstanding of the deal he had reached.
Congress was never expected to match the tax increases with spending cuts on a 3-to-1 basis. Reagan appeared to acknowledge this in his speech when he referred to outlays (which would include interest expenses), rather than spending cuts.
In the end, lawmakers apparently did a better job of living up to the bargain than the administration did.
If people want to cite the lessons of history, they need to get the history right in the first place.
Four Pinocchios
The historical myth that Reagan raised $1 of taxes in exchange for $3 of spending cuts