President’s Claim That Tax Cuts Pay For Themselves Refuted By Administration’s Own Analysis

By James Horney

In remarks on July 11 touting revised deficit projections in the Mid-Session Review of the Budget, President Bush once again claimed that tax cuts pay for themselves:

“Some in Washington say we had to choose between cutting taxes and cutting the deficit….Today’s numbers show that that was a false choice. The economic growth fueled by tax relief has helped send our tax revenues soaring. That’s what has happened.”[1]

These remarks mirror previous statements by the President, the Vice-President, and key Congressional leaders that the increase in revenues in 2005 and the increase now projected for 2006 prove that tax cuts “pay for themselves” — that the economy expands so much as a result of tax cuts that it produces the same level of revenue as it would have without the tax cuts.[2]