Larry Kudlow writes:
There are essentially two kinds of pay-go. One is a spending limitation that was used by the Gingrich Congress to balance the budget in the 1990s. This would be good. The other is a revenue pay-go, which is not so good. In this scenario, if the Democrats cobbled together a big-bang deficit-reduction package, large tax hikes would be put in place to meet the new deficit targets. Since Congress scores the investor tax cuts on dividends and capital gains as static revenue losses - even though the evidence shows they pay for themselves - these tax cuts would be subject to repeal or rollback.
Can anybody show me this evidence? I'm willing to see it, but my understanding is that literally every serious study belies this. For instance, the US Treasury recently released a "dynamic scoring" analysis of the tax cuts -- the precise method of analysis that should show they pay for themselves. Instead, it showed that even under the most favorable assumptions, the tax cuts would cover no more than 10% of their long-run cost. No more than 10%. For every dollar we cut in taxes, we make back a dime. That's a mighty odd definition of "paying for itself." Kash Mansori, using data from the Republican convened Joint Study Group on Taxation, made the results even starker in this graph:
So is Kudlow just a liar? Or is there some secret treasure trove of data out there that I'm not aware of?
