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Wednesday, May 17, 2006
Tax Cuts Grow Debt, Not Economy
Today, President Bush signed the $70 billion Deficit Growth Package (aka Tax Relief Extension Reconciliation Act of 2005) into law. And as he places more debt on the shoulders of our children and grandchildren, he continues to mislead the American people by claiming that the 2003 tax cuts are the cause of the growing economy.
One of the most important decisions we made was to cut the taxes on dividends and capital gains. These cuts were designed to lower the cost of capital and to encourage businesses to expand and hire new workers. And these tax cuts are doing exactly what we expected. When these cuts were passed in 2003, business investment had been dropping for several years. Since then, business investment has been growing at more than 9 percent a year. Statements like these are extremely misleading, however. As a Center on Budget and Policy Priorities report points out, statements such as this muddle causation and correlation. Indeed, if the President believes that the 2003 tax cuts caused the economy to expand, then he must also believe that Presdient Clinton’s 1993 tax increase caused even stronger economic growth. Does the president not want a greater economic expansion?
(click on image to enlarge)
Posted by Craig Jennings
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