Issue Position: Tax Cuts and Unemployment Benefits

Issue Position

I was recently asked to explain my position on extending the Bush tax cuts and continuing the federal funding of unemployment benefits: Tax policy is not spending. It is on the revenue side of the equation. Any theoretical reductions in revenue, as a result of tax cuts, are based on static analysis. That analysis assumes that changes in consumer, business, and investor behavior will not change. This is a fallacy. Therefore, dynamic analysis must be used. We know from history that tax cuts lead to economic growth. The best example is from the 1980s when Ronald Reagan convinced congress to enact massive tax cuts. Those cuts lead to an epic expansion of the economy. During that decade, revenues to the federal treasury doubled. Regarding federal unemployment benefits, it is clear from the 10th Amendment that the federal government should not even consider such spending. Furthermore, we know from dynamic analysis that when a government taxes something they get less of it. Likewise, when they subsidize something they get more of it. Therefore, logic dictates that subsidizing unemployment encourages and extends the unemployment problem. As an aside, I do not condemn the citizenry for accepting government welfare benefits. In my opinion, the government is at fault for offering benefits that violate the 10th Amendment. These types of policy decisions should be strictly within the domain of the states.

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