The New York Times reported on Thursday that Senate Republicans applied pressure to the nonpartisan Congressional Research Service (CRS) in September, successfully persuading it to withdraw a report finding that lowering marginal tax rates for the wealthiest Americans had no effect on economic growth or job creation.
"The pressure applied to the research service comes amid a broader Republican effort to raise questions about research and statistics that were once trusted as nonpartisan and apolitical," the Times reported. Democrats in Congress, however, have resurfaced the report and published it in full. It can be read below.
Republicans told the Times they had issues with the tone, wording and scope of the report, but they clearly objected most strongly to its findings, which undermine the governing fiscal philosophy of the party, that tax cuts for the wealthy will spur growth and benefit everybody.
GOP officials told The Times that the decision by the CRS came after a cooperative discussion, but Democrats have suggested that the move is part of a broader effort by Republicans to squelch legitimate research that runs counter to their economic principles.
The CRS report, by researcher Thomas Hungerford, concluded:
The results of the analysis suggest that changes over the past 65 years in the top marginal tax rate and the top capital gains tax rate do not appear correlated with economic growth. The reduction in the top tax rates appears to be uncorrelated with saving, investment, and productivity growth. The top tax rates appear to have little or no relation to the size of the economic pie.
However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution. As measured by IRS data, the share of income accruing to the top 0.1% of U.S. families increased from 4.2% in 1945 to 12.3% by 2007 before falling to 9.2% due to the 2007-2009 recession. At the same time, the average tax rate paid by the top 0.1% fell from over 50% in 1945 to about 25% in 2009. Tax policy could have a relation to how the economic pie is sliced—lower top tax rates may be associated with greater income disparities.
Rep. Sandy Levin of Michigan, the top Democrat on the Ways and Means Committee, demanded the CRS explain its decision. "The impartial research and advice provided by CRS experts informs and strengthens the work of Congress. However, this valuable role hinges on the impartiality of CRS analysts and their freedom from political pressure. As with other non-partisan institutions, subjecting CRS analysts to political considerations undermines the legislative process and the American people’s trust in it," Levin wrote in a letter to CRS. "Therefore I was deeply disturbed to hear that Mr. Hungerford’s report was taken down in response to political pressure from Congressional Republicans who had ideological objections to the report’s factual findings and conclusion."
(Scroll down for Hungerford's response in the UPDATE.)
The report is extensive, but the reasoning behind its conclusion is fairly straightforward. The richest Americans are the least likely to spend extra money they get as a result of a tax cut, and are more likely to save it or invest it offshore. Those on the lower end of the economic spectrum, meanwhile, are the most likely to spend transfer payments they receive from the government.
A release by the Democratic Policy & Communications Center on Wednesday accused Republicans of attempting to bury the report because its "findings undermine a central tenet of Republican party orthodoxy on taxes." They included a copy of the original report, which is available below:
UPDATE: 5:45 p.m. -- Thomas Hungerford, the CRS researcher who produced the report, told HuffPost that he stands by it. "Basically, the decision to take it down, I think The New York Times article basically got it right, that it was pressure from the Senate minority to take it down," Hungerford said. "CRS reports go through many layers of review before they're issued and as far as the tone and the conclusions go, people who specifically look at the writing and the tone said it was okay. So it's not going to be that and as I can tell you outright, I stand by the report and the analysis in the report."
Hungerford said that he had never experienced suppression like this before, and he pushed back on the GOP argument that he had only looked at the effect of tax cuts in the year immediately following enactment. Regardless, he said, Republicans argue that tax breaks for the rich will bring an immediate benefit to the economy, so their criticism is inconsistent. "I checked out three years and then five years and found that no, it doesn't change the results or the conclusion of my paper. So in a way, I find it interesting that they keep talking about the need to lower the top tax rate in order to stimulate the economy now," he said. 'It sounds like they're being a little inconsistent here."
Despite the pressure, Hungerford said he'll continue doing his job in a nonpartisan way. "I'm not going to change. My job is to do economic analysis on issues that the Congress is comparing and quite frankly, I'm going to continue doing that. That's my job," he said.
The Times reported that Hungerford has given $5,000 this election cycle to Democrats. HuffPost asked if that biased his report in any way. "I leave any political baggage at the door when I walk into my office and pick it up on my way out. I'm there to provide help to members of both parties, which I do," Hungerford said.
Also on HuffPost:
Wealthy Benefit Most From Tax Cuts
Paul Ryan's most recent budget proposal would save those making between $20,000 and $30,000 just $246 in taxes, compared to savings of $265,011 for those who make over $1 million, according to analysis from the <a href="http://www.washingtonpost.com/business/economy/2012/04/02/gIQAjn0grS_graphic.html" target="_hplink">Center on Budget and Policy Priorities</a>.
Health Care Cuts
The "Path to Prosperity" would cut $2.4 trillion from Medicaid and other health care programs for people with low or moderate incomes, according to analysis from the <a href="http://www.washingtonpost.com/business/economy/2012/04/02/gIQAjn0grS_graphic.html" target="_hplink">Center on Budget and Policy Priorities</a>.
Fewer People Covered By Medicaid
Under Ryan's "Path to Prosperity" as many as 44 million fewer people would be covered under Medicaid, <a href="http://www.cbsnews.com/video/watch/?id=7417870n" target="_hplink">according to CBS News</a>.
Reduced Health Care For Retirees
Ryan would raise the age of Medicare eligibility from 65 to 67. If the Affordable Care Act was repealed, something Romney has pledged, that means many 65- and 66-year-olds would be left uninsured, the <a href="http://mediamatters.org/research/2012/08/11/seven-things-the-media-needs-to-know-about-paul/189277" target="_hplink">CBPP reports</a>.
Seniors Would Pay More For Health Coverage
Under Ryan's "Path to Prosperity," senior citizens would have to pay as much as 68 percent of their health care coverage, up from 25 percent today, <a href="http://www.cbsnews.com/video/watch/?id=7417870n" target="_hplink">CBS News reports.</a>
Cuts To Food Stamp Programs
Ryan's proposed "Path to Prosperity" includes $134 billion in cuts to SNAP, according to analysis from the <a href="http://www.washingtonpost.com/business/economy/2012/04/02/gIQAjn0grS_graphic.html" target="_hplink">Center on Budget and Policy Priorities</a>.
Lower Tax Credit For Single Moms
A single mother of two working full time at the minimum wage would have her Child Tax Credit cut by more than $1,500, assuming she made $14,500 a year, according to the <a href="http://mediamatters.org/research/2012/08/11/seven-things-the-media-needs-to-know-about-paul/189277" target="_hplink">Center on Budget and Policy Priorities</a>.
Less Money For Education
Compared to the most recent White House budget proposal, Ryan's budget spends 33 percent less on education, training, employment and social services, <a href="http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/08/12/what-paul-ryans-budget-actually-cuts-and-by-how-much/" target="_hplink">the <em>Washington Post</em> reports</a>.
Poor Weather Forecasts
Ryan's proposed cuts to environment and natural resource programs could result in weather forecasts being only half as accurate, according to Third Way's budget expert, David Kendall. "For many people planning a weekend outdoors, they may have to wait until Thursday for a forecast as accurate as one they now get on Monday," <a href="http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/08/12/what-paul-ryans-budget-actually-cuts-and-by-how-much/" target="_hplink">he's quoted as saying in the <em>Washington Post</em></a>.
No Raises For Government Workers
The current government worker pay freeze would be extended under the "Path to Prosperity," meaning public-sector employees wouldn't get a raise until at least 2015, <a href="http://www.washingtonpost.com/blogs/federal-eye/post/paul-ryans-budget-plan-hits-federal-workers/2012/08/11/8953b832-e3a3-11e1-98e7-89d659f9c106_blog.html" target="_hplink">the <em>Washington Post</em> reports</a>.