More proof that tax cuts aren't free.

The search for better economic policy.
July 31 2006 1:16 PM

The Last Laffer

Bush's Treasury admits that tax cuts aren't free.

(Continued from Page 1)

If we believe that spending cuts of this magnitude are unrealistic, then the Treasury economists have another important finding: The sooner we get rid of the tax cuts, the better it will be for the economy. Specifically, they found that national output would be 0.9 percent higher in the long run if we let them expire in 2010 rather than allowing them to continue along, forcing us to face even bigger tax increases in the future to make up for all of the added deficits and debt.

The Treasury report probably won't change the minds of supply-siders, coming as it does on top of 25 years of similar findings by economists. But it should help convert Democrats into true believers in dynamic analysis.

Jason Furman is a senior fellow and director of the Hamilton Project at the Brookings Institution.

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