Listening to the White House babble about fiscal policy and economic growth, I’m reminded of an incident where my scientist wife told me I was like a small child when it came to visiting doctors and taking medicine. You see, I hate going to the doctor’s office even when I’m quite ill as I was a few months back. And I’d much rather eat ice cream than take medicine. So I really wanted to go to the store and purchase some French vanilla ice cream to ease the pain – to which the wife said “only if you go to the doctor’s office first”. Fine, I went to see the doctor, stopped by the grocery store, purchased a pint of French vanilla ice cream, ate it, and within a couple of days, I was much better. So do we have scientific proof that Dreyer’s French vanilla ice cream cures the flu or whatever I had? After all, the doctor never told me to do anything. But he wouldn’t as he knows to call the wife, which he did – to which he said my ailment was going to cure itself without medicine.
So I’m reading some story about our Treas. Sec. who said: “I am confident we will continue to see good progress on the deficit. It is clear now that the president’s objective of cutting the deficit in half will be met and exceeded ahead of schedule … What the president’s leadership of the economy has demonstrated is that low tax rates create investment, create jobs, create growth; and now with the surge of revenues we are seeing as a result we can also say that low taxes are consistent with rising federal revenues which of course help bring the deficit down”.
And apparently, Nobel Prize winning Tony Snow told Katie Couric that tax revenues are ahead of projections proving that the 2003 tax cut caused rapid economic growth. And yes, Dreyer’s French vanilla ice cream was the only reason I’m not still in bed with that flu.
If anyone had asked me during early 2003 whether the economy would recover from the anemic economic performance of the past couple of years, I would have said yes even if I thought that 2003 tax cut proposal would fail. In fact, I thought some of the economic forecasts back then were too conservative given the size of the GDP gap. So MY forecast for GDP growth and tax revenue growth would have been higher than many of those forecasts. Now if someone had said to me – what if they do pass the 2003 tax cut. My forecast for growth would have been increased only marginally so my forecast for tax revenue growth would have been lowered.
Now if you asked my doctor similar questions – he would have told you that I would have recovered from my flu just as fast without the ice cream and my waistline would currently be a little bit smaller. But what do doctors know? Time to go buy a whole gallon of Dreyer’s French vanilla ice cream!
Update: Our friend Calculated Risk provides this link to the latest Snow Job from the Sec. of the Treasury. Alas, reporter Jeannine Aversa does precious little to rebut the free lunch garbage from this White House:
Snow credited the president’s tax cuts with helping to boost overall economic activity and thus tax receipts as well. Democrats contend that the tax cuts plunged the government’s balance sheets into red ink and ended four years of budget surpluses from 1998 though 2001. The administration has blamed mostly higher spending to fight the wars in Iraq and Afghanistan and spending to combat terrorism within the United States for the budget deficits.
Someone ring Dean Baker and Brad DeLong!