WASHINGTON (Reuters) – The new Republican-appointed director of the Congressional Budget Office delivered some bad news on Tuesday to the party’s “Reaganomics” devotees: Tax cuts don’t pay for themselves through turbocharged economic growth.
Keith Hall, who served as an economic adviser to former President George W. Bush, made the pronouncement at his first news conference after the CBO reduced its 2015 budget deficit forecast by $60 billion.
“No, the evidence is that tax cuts do not pay for themselves,” Hall said in response to a reporter’s question. “And our models that we’re doing, our macroeconomic effects, show that.”
His comment is at odds with lingering economic theory from the 1980s that some Republicans still hold dear: Stronger economic growth generated by tax cuts would boost revenues so much that there is less need to find offsetting savings.