WASHINGTON -- As Congress addresses the federal deficit and begins debating next year's budget, a centerpiece of the conversation is whether to raise taxes and increase revenue for the government or to simply cut spending.
In his speech last week, President Obama called for allowing the Bush tax cuts to expire for individuals making $200,000 or more a year and couples making $250,000 or more. Some conservatives, such as Sen. Tom Coburn (R-Okla.) have voiced support for tax increases.
But many other Republicans, especially freshmen members affiliated with the Tea Party, aren't so keen on that idea. On ABC's "This Week," host Christiane Amanpour mentioned to freshman Rep. Joe Walsh (R-Ill.) that House Budget Committee Chair Paul Ryan's (R-Wis.) budget plan doesn't address raising revenue, while Obama's does.
"Can you really sustain what everyone's calling for just by cuts in public services? Doesn't there need to be revenue-raising mechanisms?" she asked.
Walsh replied that the best way to raise revenues is to grow the economy. "You get taxes and regulations off the backs of businesses so that revenues can increase," he insisted.
Amanpour continued to press him, expressing skepticism that Congress can really balance the budget just by cutting social programs. Walsh insisted that tax cuts consistently help the economy grow and therefore raise revenues for the government.
"In the 80s, federal revenues went up," said Walsh. "We didn't cut spending. Revenues went up in the 80s. Every time we've cut taxes, revenues have gone up. The economy has grown."
Walsh isn't the first lawmaker to make this argument. Last year, Senate Minority Leader Mitch McConnell (R-Ky.) made a similar comment about the Bush tax cuts.
"There's no evidence whatsoever that the Bush tax cuts actually diminished revenue," he asserted. "They increased revenue, because of the vibrancy of these tax cuts in the economy."
But even conservative economists have cast doubt on this claim.
"Federal revenue is lower today than it would have been without the tax cuts. There's really no dispute among economists about that," said Alan D. Viard, a former White House economist under George W. Bush, in a 2006 Washington Post article.
Robert Carroll, deputy assistant Treasury secretary for tax analysis, also said that no one in the administration believes tax cuts created a surge in revenue. "As a matter of principle, we do not think tax cuts pay for themselves," Carroll said.
Bruce Bartlett, a Reagan economist who became a strong critic of the Bush administration's policies, used data from the Office of Management and Budget in a blog post last year to illustrate how "the Bush tax cuts reduced revenue rather significantly."
On CNN's "State of the Union," Sen. Rand Paul (R-Ky.) rejected calls for tax increases, suggesting instead to cut military spending and funds for welfare programs.
"I think there is a compromise," he said. "But the compromise is not to raise taxes, the compromise is for conservatives to admit that the military budget's going to have to be cut. We've doubled military spending. I believe in a strong national defense, but conservatives will have to compromise and we will have to cut military spending. Liberals will have to compromise and we will have to cut domestic welfare. The compromise is where we cut, not where we raise taxes."
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