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Congressional Research Service meets Republican Memory Hole

Late on a Friday in September, the Congressional Research Service (CRS), a respected agency within the Library of Congress, released a report concluding, in effect, that there is no objective support for core Republican economic policies.  Reducing the top tax rates, the report concludes, has no correlation with the nation’s economic growth, but does contribute to the growing gap between the wealthy and the rest of Americans. The Republican Memory Hole team then suppressed the report.

Some media reports followed, and then two weeks later the CRS report quietly went away from the CRS website without having had much impact, even though it was a non-partisan debunking of Mitt Romney’s core economic argument.  More than a month later, the New York Times published a story asking, in effect, “Now what was that all about?”  One answer to the mystery turned out to be that Republican pressure on the CRS over the style and content of the report had effectively sent it down the collective memory hole.

Now the Congressional Budget Office has reached essentially the same conclusions, in a report issued November 8.  So far, this report is still standing, but Republican intensity in defense of tax cuts for the wealthy is growing as their December 31 expiration date approaches.

Political Pressure Produces Political Silence

In late September, in the midst of the presidential campaign, the CRS had quietly caved in to political pressure.  Rather than address critical questions, the CRS decided simply not to defend its work, despite its longstanding reputation for accuracy and non-partisanship in its reports going back decades.  CRS officially withdrew the report, despite the objection of its economics division, while the report’s author was on vacation.  Democrats and others have since re-posted it unofficially but unchanged.

No previous Congressional Research Service report in living memory has ever been withdrawn before, according to the New York Times. Not that the Times made a big deal about any of this.  The story ran on Friday, November 2, on page B1 of the second section with the bland headline: “Tax Report Withdrawn At Request of G.O.P.”  (CRS refused to answer a reporter’s inquiry, saying it only answers questions from Congress.)

Over the next few days there was a burst of coverage focusing on Republican suppression of uncomfortable realities, but it was overwhelmed by the election coverage.

George Washington Law School Professor Jonathan Turley characterized the sequence of events as “the GOP attempting to suppress a non-partisan tax study that debunked their entire Ayn Rand/neoconservative taxation mythology that catering to the wealthy creates jobs….  It also raises some interesting questions about political culpability and consequences.”

The Professionals Stood by Their Work

Challenging the Times’ assertion that CRS pulled the study “on their own,” Turley scoffed: Sure they did.  That’s why the report’s author stands by his work and the report was withdrawn over the objections of the CRS’ economic team leadership….  When manifest attempts like this to lie to the public are discovered, the political question becomes what should be done about it and who should be punished for abusing the public trust in the name of political expediency (and greed as in this particular case)?

The question of who should be punished – and how – matters, but not as much as some other questions:

  • How can we insulate non-partisan institutions like the Congressional Research Service from overt or covert political manipulation?
  • Why were the media so indifferent to the report when it came out in September and rebutted the Romney economic argument?
  • Why were non-Republican political campaigns not all over the report when it was first released?
  • How is it that a false economic theory, discredited for years, is still treated as if it was credible?

In 2006, the Treasury Department under President Bush studied the Bush tax cuts and found their economic impact negligible, certainly not sufficient to extend them past their 2010 expiration date.   The report concluded that the “Bush tax cuts” should expire on schedule in 2010, since a permanent tax reduction “would lead to an unsustainable accumulation of debt.”  This conclusion has been supported time and again by other non-partisan studies, and of course attacked by Republicans and their allies.

Infrastructure Spending Worth More Than Tax Cuts

Even before the CRS report was released in September, The Economist had a report about austerity and spending in its August 17 issue that referred to an earlier CRS report that had reached the same conclusion but was not suppressed.  According to The Economist:

The problem with infrastructure spending is the intangibility of its effects. Since projects take time and money to construct, the argument for infrastructure spending having a positive impact on productivity in the short-term is difficult to quantify, though it seems to be able to generate a short- to medium-run boost, in part by raising prospects for near-term business investment. In the longer term however, infrastructure investment can deliver positive returns to productivity, says a study by the Congressional Research Service, and this is a generally agreed consensus among academics, economists, and policymakers alike.

Princeton Economics Professor Paul Krugman explained in his New York Times column November 1, that one reason he didn’t write about the CRS report when it appeared in September because “it was basically old news….  Nobody has ever been able to find clear evidence of a link between high-end tax cuts and growth.”

By November 8, the Nobel-prize winning economist was urging President Obama to resist Republican pressure to make an economic deal in the next few weeks:

Why? Because Republicans are trying, for the third time since he took office, to use economic blackmail to achieve a goal they lack the votes to achieve through the normal legislative process. In particular, they want to extend the Bush tax cuts for the wealthy, even though the nation can’t afford to make those tax cuts permanent and the public believes that taxes on the rich should go up — and they’re threatening to block any deal on anything else unless they get their way. So they are, in effect, threatening to tank the economy unless their demands are met.

Congressman Seeks Answers to Political Suppression

On November 1, Rep. Sandy Levin, D-MI, wrote a letter to the director of the Congressional Research Service, Mary Mazanec, to express his “deep concern” about the CRS decision to remove the “Taxes and the Economy” report from its website.  Levin asked the director for an explanation of the removal, who made the decision, and “what considerations led to it.”  The director has not yet responded.

Sander, who is considered the top tax writing Democrat in the House, is the ranking member of the House Ways and Means Committee, where all tax legislation originates.  On November 6, he was re-elected with 62% of the vote from his newly-drawn Michigan district.

The report, which remains available from a variety of online sources, remains unchallenged by any contrary evidence.  The report’s key finding was that there was no evidence to support the idea that tax cuts for the wealthy produce economic growth.  Even though Republicans succeeded in suppressing the report, they have presented no rebuttal evidence, such as support for the proposition that the Bush tax cuts produced the Bush economic boom during his term in office.

  • DJ

    Two comments on the “tax breaks for the rich” economic strategy. First, just today at the farmers market I attend, a man who was obviously not rich lambasted Obama for trying to balance spending by raising taxes on the rich. I don’t understand why this is a problem for him, but it is. There remains a LOT of support for tax breaks for the rich – whether in the misguided belief that spending trickles down, or the fantasy that we might all be making more than $250,000 next year, I can’t say.

    But secondly, and this is far more important, the economic impact of tax cuts is not what is claimed: they don’t stimulate the economy. This can be proven in both macroeconomic terms – over the past 50 years, our top tax rate has declined from 90% to as low as 36%, and our economy continues to falter – and in microeconomic terms. Specifically, if you are a business owner and you’re making a profit (if you’re not making a profit, tax rates are irrelevant), the question you ask your accountant at the end of the year is, “How much will I save if I buy some new equipment?” The higher the tax rate, the more you’re going to save, and the more likely you are to reinvest that money in your business. The lower the tax rate the more likely you are to NOT reinvest in your business, because it doesn’t benefit you as much.

    No one wants to pay higher taxes. But let’s get real – the lower tax argument is fatally flawed and counterproductive. The common argument against tax cuts is that we can’t afford them, and that’s true. But a much better argument is, as an economic stimulus, they don’t work. They may be a means of forcing government to get smaller (though it hasn’t had that effect yet), but as an economic policy, lower tax rates are a red herring.

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