In an editorial (sub. required) praising the White House’s decision to open an office dedicated to “dynamic” estimates of the effects of tax cut on revenues, the Wall Street Journal editorial board makes yet another disingenuous claim:

Expect to read in the coming days from liberal critics that supply-siders are hijacking Treasury to show that “tax cuts pay for themselves.” But the real goal here is accurate score-keeping that takes into account the real impact that taxes have on the economy. And no supply-sider we know — and we know them all — claims that all tax cuts pay for themselves on a dollar-for-dollar basis.

The WSJ goes on to write that “Not all tax cuts are created economically equal because they have different effects on incentives,” differentiating between tax rebates, which they see as ineffectual, and cuts in rates on marginal income and capital gains. Marginal income rate cuts, they write, “recoup much of the revenue that ‘static’ models estimate they will lose,” and “[c]uts in capital gains tax rates have had an even larger revenue payback over the years.” Strangely, however, the WSJ shies away from claiming that any of these types of tax cuts increase revenue.

In short, the WSJ wants to disavow the claim that “all tax cuts pay for themselves on a dollar-for-dollar basis” by differentiating between “all” tax cuts and those proposed by conservative politicians. But this is simple rhetorical misdirection. The reason “liberal critics” might claim that “supply-siders are hijacking Treasury to show that ‘tax cuts pay for themselves’” is because (as I pointed out yesterday)
Dick Cheney said exactly that:

The President’s tax policies have strengthened the economy, as we knew they would. And despite forecasts to the contrary, the tax cuts have translated into higher federal revenues… [I]t’s time to reexamine our assumptions and to consider using more dynamic analysis to measure the true impact of tax cuts on the American economy.

Recognizing this, the President’s recently submitted budget would create a new Dynamic Analysis Division within the Treasury Department to analyze major tax proposals. The evidence is in, it’s time for everyone to admit that sensible tax cuts increase economic growth, and add to the federal treasury.

More importantly, the editorial board and its political allies have repeatedly claimed over the last six years that tax cuts increase revenue, both in general and with regard to the Bush tax cuts in particular:

Vice President Cheney, February 2006: “[D]espite forecasts to the contrary, the tax cuts have translated into higher federal revenues.”

President Bush, February 2006: “One of the interesting things that I hope you realize when it comes to cutting taxes is this tax relief not only has helped our economy, but it’s helped the federal budget. In 2004, tax revenues to the Treasury grew about 5.5 percent. That’s kind of counter-intuitive, isn’t it? At least it is for some in Washington. You cut taxes and the tax revenues increase. See, some people are going to say, well, you cut taxes, you’re going to have less revenue. No, that’s not what happened. What happened was we cut taxes and in 2004, revenues increased 5.5 percent. And last year those revenues increased 14.5 percent, or $274 billion. And the reason why is cutting taxes caused the economy to grow, and as the economy grows there is more revenue generated in the private sector, which yields more tax revenues.”

House Majority Whip Roy Blunt, January 2006: “[T]he tax cuts have even helped reduce the federal budget deficit through record revenue growth fueled by an expanding economy.”

Rep. David Drier, December 2005: “By cutting taxes, you grow the economy, and you generate an enhanced flow of revenues to the Treasury.”

Former presidential candidate Steve Forbes, August 2005: “Experience demonstrates time and time again — the Harding-Coolidge tax cuts of the 1920s, the Kennedy cuts of the ’60s, the Reagan cuts of the ’80s and the Bush reductions of 2003 — that lower tax rates lead to more economic activity, which leads to more government revenue.”

President Bush, August 2005: “The tax relief stimulated economic vitality and growth and it has helped increase revenues to the Treasury.”

Wall Street Journal editorial board, July 2005: “Not even the most unbridled supply-sider predicted that President Bush’s investment tax cuts would unleash such a spurt of tax receipts this year. But thanks to sustained economic growth, more Americans working and improved business profits, individual income tax receipts have shot up by 17.6%. Even more astonishing is the nearly 41% spike in corporate revenues. There’s a fiscal lesson here that bears repeating: The best way to grow tax revenues is to grow the tax base, and that is what has happened this year.”

Influential conservative pundit Stephen Moore, June 2005: “In the 1980s, President Ronald Reagan chopped the highest personal income tax rate from the confiscatory 70% rate that he inherited when he entered office to 28% when he left office and the resulting economic burst caused federal tax receipts to almost precisely double: from $517 billion to $1,032 billion.”

President Bush, May 2003: “And the other way to deal with the deficit is to put policies in place that increase the revenues coming into the Treasury. And the best way to encourage revenues coming into the Treasury is to promote policy which encourages economic growth and vitality. A growing economy is going to produce more revenues for the federal Treasury. The way to deal with the deficit is not to be timid on the growth package; the way to deal with the deficit is to have a robust enough growth package so we get more revenues coming into the federal Treasury.”

Vice President Cheney, January 2003: “The President’s proposals will reduce the tax burden on the American people by $670 billion over the next 10 years. By leaving more money in the hands of the people who earn it, people who will spend and invest and save and add momentum to our recovery, we’ll help create more jobs and ultimately increase tax revenues for the government.”

Vice President Cheney, January 2003: “The President’s growth package will reduce the tax burden on the American people by $98 billion this year and $670 billion over the next ten years. But the actual impact on the deficit will be considerably smaller than the static projections because the President’s package will generate new growth, it will expand the tax base and thus increase tax revenue to the federal government ultimately.”

White House press secretary Ari Fleischer, January 2003: “The entire [tax cut] package the President does believe will lead to growth, which will over time grow the economy, create additional revenues for the federal government and pay for itself.”

President Bush, January 2003: “[These tax cut proposals] are essential for the long run, as well — to lay the groundwork for future growth and future prosperity. That growth will bring the added benefit of higher revenues for the government — revenues that will keep tax rates low, while fulfilling key obligations and protecting programs such as Medicare and Social Security.”

President Bush, November 2002: “Well, we have a deficit because tax revenues are down. Make no mistake about it, the tax relief package that we passed — that should be permanent, by the way — has helped the economy, and that the deficit would have been bigger without the tax relief package.”

I can’t see why anyone would think that supply-siders believe tax cuts increase revenue!