Republican Study Committee

REPUBLICAN STUDY COMMITTEE

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Mr. FLAKE. Mr. Speaker, I thank the gentleman for yielding and putting together this Special Order. And I just have a minute, but I would like to submit a statement for the Record and to point out how important it is.

I am glad so many are making the distinction between tax relief and spending, overall government spending. You simply can't assume that spending money on a teapot museum ought to be treated the same as leaving money in people's pockets. You simply can't equate them the same. You can't score them the same. Whenever we have tax relief, we have increased revenue. As the gentleman from Texas correctly pointed out, those are the facts, and it has happened again and again and again.

So I am glad that so many are saying that tonight, and, again, I will submit a statement for the Record.

I applaud the President's commitment to balancing the budget by 2012 without raising taxes. I also support the attention given to cutting entitlement growth. Mandatory entitlement spending eats up 50 percent of the almost $3 trillion budget and is growing at an alarming rate.

However, I am concerned that Members will erode these savings by proposing to increase entitlement programs and, in order to adhere to the new PAYGO rules, claim that the increases will be offset by eliminating some of the important tax relief Congress has passed over the last 5 years.

This rationale assumes that a tax cut is simply a straight-out loss of revenue for the Federal Government. This is why it is extremely important to consider how tax cuts have actually affected revenues over the last couple of years.

For example, the Joint Committee on Taxation estimated that the cost of the 2003 and 2004 tax cuts would equal $296 billion in lost revenues for fiscal years 2003 to 2005.

However, tax revenues actually finished fiscal year 2005 at $124 billion above the adjusted baseline, meaning that 42 percent of the projected revenue loss had been recouped. That number still continues to grow each year.

It is irresponsible to assume that by eliminating tax relief the government will see an increase in revenues. I believe the opposite is true.

We must take into account the increased capital that tax relief produces, which translates into more investments and savings, more jobs, and, ultimately, more income tax revenues.

This is why I will soon reintroduce my bill to require the CBO and Joint Committee on Taxation to include dynamic scores in their analysis of all revenue bills, and encourage my colleagues to cosponsor it.

We cannot continue to make policy decisions based on predictions that simply do not take into consideration fundamental economic principles that have been proven time and again.

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