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McConnell and Kyl Peddle GOP Whopper on Taxes and Debt

June 27, 2011

It is often said that historical events occur twice, first as tragedy, then as farce. But as the top two Senate Republicans showed once again on Sunday, when it comes to comes to the GOP and taxes, some episodes produce both. After successfully blackmailing President Obama in December into extending the Bush tax cuts through 2012 by falsely claiming "there's no evidence whatsoever that the Bush tax cuts actually diminished revenue," Mitch McConnell (R-KY) and Jon Kyl (R-AZ) took to the airwaves to declare "throwing more tax revenue into the mix is simply not going to produce a desirable result." This time, the Republican hostage-takers are willing to see the United States default on its debt obligations and trigger a global economic crisis - all in the name of a lie.
As President Obama prepared to wade into the negotiations to raise the nation's $14.3 trillion debt ceiling, McConnell and Kyl fired a shot across his bow. After joining House Minority Leader Eric Cantor in walking out of the talks last week over Democratic proposals to curb deductions and raise rates for upper income taxpayers, Kyl warned Sunday, "I think the president has to make a decision -- which is more important to him: solving this problem, reducing spending somewhat, or making sure that we raise taxes on American economy?" Insisting once again that "America does not face a debt crisis because we tax too little, but because Washington spends too much," Minority Leader McConnell announced:

"Throwing more tax revenue into the mix is simply not going to produce a desirable result, and it won't pass."

Sadly for McConnell, with the federal tax burden at its lowest level in 60 years, throwing more tax revenue isn't desirable; it's absolutely necessary.

As the chart representing President Obama's 2012 budget proposal above reflects, the American tax burden hasn't been this low in generations. Thanks to the combination of the Bush Recession and the latest Obama tax cuts, the AP reported, "as a share of the nation's economy, Uncle Sam's take this year will be the lowest since 1950, when the Korean War was just getting under way." In January, the Congressional Budget Office (CBO) explained that "revenues would be just under 15 percent of GDP; levels that low have not been seen since 1950." (The Bureau of Economic Analysis (BEA) reached a similar conclusion last May, finding that "Federal, state and local taxes -- including income, property, sales and other taxes -- consumed 9.2% of all personal income in 2009, the lowest rate since 1950.") Last April, the Center on Budget and Policy Priorities concluded, "Middle-income Americans are now paying federal taxes at or near historically low levels, according to the latest available data." As Michael Ettlinger, head of economic policy at the liberal Center for American Progress put it, "The idea that taxes are high right now is pretty much nuts."
In May, former Reagan Treasury official Bruce Bartlett concurred:

In short, by the broadest measure of the tax rate, the current level is unusually low and has been for some time. Revenues were 14.9 percent of G.D.P. in both 2009 and 2010. Yet if one listens to Republicans, one would think that taxes have never been higher, that an excessive tax burden is the most important constraint holding back economic growth and that a big tax cut is exactly what the economy needs to get growing again.

Of course, Republicans have been saying the same thing for years.
It was President Bush who summed up the uber lie of the Republican Party when he declared, "You cut taxes and the tax revenues increase." Last summer, Jon Kyl (R-AZ) the second ranking Senate Republican made the same point another way, telling Chris Wallace of Fox News, "You should never have to offset cost of a deliberate decision to reduce tax rates on Americans." And it was his boss, Senate Minority Leader Mitch McConnell, who explained how tax cuts magically turn red ink black:

"There's no evidence whatsoever that the Bush tax cuts actually diminished revenue. They increased revenue because of the vibrancy of these tax cuts in the economy. So I think what Senator Kyl was expressing was the view of virtually every Republican on that subject."

That every Republican believes it doesn't make it true. Unfortunately for McConnell, there is a mountain of evidence documenting that the Bush tax cuts actually diminished revenue. Including, it turns out, from an outfit called the Congressional Budget Office.
As the Washington Post explained the CBO data, more than anything else it was his tax cuts which helped George W. Bush turn a projected U.S. surplus into red ink as far as the eye can see:

The biggest culprit, by far, has been an erosion of tax revenue triggered largely by two recessions and multiple rounds of tax cuts. Together, the economy and the tax bills enacted under former president George W. Bush, and to a lesser extent by President Obama, wiped out $6.3 trillion in anticipated revenue. That's nearly half of the $12.7 trillion swing from projected surpluses to real debt.

Analyses from the Center on Budget and Policy Priorities echoed the CBO's conclusions. CBPP found that Bush's $1.4 trillion tax cut in 2001, followed by a $550 billion second round in 2003, accounted for half of the yawning budget deficits he produced during his tenure. And as another recent analysis by the Center on Budget and Policy Priorities showed, over the next decade the Bush tax cuts if made permanent starting in 2013 would account for more of the nation's debt than Iraq, Afghanistan, TARP, the stimulus, and revenue lost to the recession combined:

All told, the Bush tax cuts of 2001 and 2003 drained $2.5 trillion from the U.S. Treasury during their first decade and, if extended, would siphon off $4 trillion more during the next.
Undeterred, the same Republican leadership which voted seven times to raise the debt ceiling under President Bush would sooner see the United States default than raise a dime of new tax revenue by simply reinstating the upper income rates of the Clinton economic boom. As Jon Kyl put it, "If you want to kill the economy, raise taxes." As it turns out, it was his House counterpart John Boehner who in January explained what would really kill the U.S. economy:

"That would be a financial disaster, not only for our country but for the worldwide economy. Remember, the American people on Election Day said, 'we want to cut spending and we want to create jobs.' And you can't create jobs if you default on the federal debt."

Yet Mitch McConnell, Jon Kyl and Republicans in both house of Congress are prepared to do just that. All in the name of a lie.
(For more background, see "10 Things the GOP Doesn't Want You to Know about the Debt.")


Jon Perr
Jon Perr is a technology marketing consultant and product strategist who writes about American politics and public policy.

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