Eddie Lazear and Rob Portman Try to Communicate
Eddie Lazear and Rob Portman try to communicate with the Washington Times, rather than stick to the administration's message:
House or Senate shake-up likely to end tax cuts By Patrice Hill THE WASHINGTON TIMES October 5, 2006:
Rob Portman, director of the Office of Management and Budget... Council of Economic Advisers Chairman Ed Lazear made a pitch for extending the personal and investment tax cuts, which they believe spurred growth in the economy and stock market.
But they conceded that the tax cuts have not prompted more people to get work and contribute to the economy, while they cut deeply into government revenue and contributed to record budget deficits that have not shown much improvement until recently.
"We do not say the tax cuts pay for themselves," said Mr. Lazear. "The point is that they created a positive environment for income growth" while helping make the 2001 recession shallower than it otherwise would have been....
"We've had 9 percent growth in the stock market this year. ... How fast do you want it to increase?" [Lazear] said. "To my mind, this is solid growth and we're happy with it." Despite the revenue surge this year, the administration is projecting a precipitous drop in revenue growth to 2.4 percent in fiscal 2007, in large part because of generous cuts in the alternative minimum tax enacted by Congress. Also cutting revenue by $17 billion, they said, is the administration's decision to eliminate the telephone excise tax that President Theodore Roosevelt enacted to pay for the Spanish-American War, and to refund some of that tax....
As in past years, Mr. Portman said the White House will ask Congress to approve tens of billions more in spending on the war after it presents its budget in February. Such supplemental spending requests have been criticized as dishonest budgeting by the Committee for a Responsible Federal Budget and other government watchdog groups.
Mr. Lazear said he sees economic growth bottoming out at around 3 percent this year and next. The economy cannot grow as fast as the 4 percent average growth rates attained in the late 1990s, he said, because growth in the labor force has slowed sharply this decade.
"It's a function of the aging work force and slower population growth," he said. Mr. Lazear conceded that the cut in the top tax rate from 38 percent to 33 percent and other Bush tax cuts should have provided an incentive for more people to work, but instead both men and women have been dropping out of the labor force.
Needless to say, this raises some obvious questions, which I will steal from an anonymous economist: 1. Presumably, these tax increases would apply only to those Americans who survive the additional terrorist attacks that will be brought to fruition because the Democrats control the Congress? 2. Making reference to your comment: "We do not say the tax cuts pay for themselves," said Mr. Lazear. Have you by any chance told the President that? Because he says all the time that the tax cuts paid for themselves. 3. You apparently say that the tax cuts were successful in that "We've had 9 percent growth in the stock market this year.” But we had faster growth in the stock market after the tax increases of 1993 (which focused almost exclusively on those with the greatest income and wealth, who are the biggest individual players in the stock market). Can you reconcile those two experiences with your high regard for the tax cuts?