Rep. Tom Allen Challenges OMB Chief on the Effects of the Bush Administration's Tax Cuts
Bolten admission during exchange with Maine Congressman contradicts President Bush's claims today in Manchester, NH
Washington, D.C. - U.S. Representative Tom Allen today quizzed Joshua Bolten, Director of the federal Office of Management and Budget, on the Bush Administration's health care and tax proposals during a hearing of the House Budget Committee. An exchange between Representative Allen and Director Bolten seemed to contradict directly an assertion President Bush made during a visit to Manchester, New Hampshire, today.
"You said at one point that the effects of extending the Bush tax cuts had been factored into the budget," Representative Allen asked. "It is true, is it not, that when you factored in the continuation of the tax cuts, that meant you dropped revenue from what it would otherwise have been if the tax cuts were not continued?"
"I am not arguing that a dollar of tax cuts produces a dollar of tax revenues," Bolton said in response to Representative Allen's question.
"So, we agree at least that the tax cuts do not, by themselves, cause a revenue increase that is larger than the tax cuts themselves," Representative Allen said.
"What happened was we cut taxes, and in 2004, revenues increased 5.5 percent, and last year those revenues increased 14.5 percent, or $274 billion," President Bush told his audience today in Manchester.
"The President's claim that tax cuts cause revenue increases is simply not true," Representative Allen said. "In fact, massive tax cuts have been confirmed as the single greatest cause of the descent into deep deficits."
Representative Allen noted that the facts do not support the President's claims. In 2001, the President and OMB proposed a $1.6 trillion tax cut and projected revenues of $2.34 trillion in 2004 and $2.44 trillion in 2005.
"Now this same President and OMB look at actual receipts of $1.88 trillion in FY04 and $2.15 trillion in FY05 and praise them as revenue increases," Representative Allen said. "In reality we collected about $460 billion less in FY04 and $290 billion less in FY05 than the President predicted. In fact, federal revenues fell from 2000 to 2001, from 2001 to 2002 and from 2002 to 2003, the only time since the Depression that federal revenues fell three years in a row. In FY04, we amassed a $412 billion deficit, the largest in our nation's history. While the deficit dropped to $318 billion in FY05, the non-partisan Congressional Budget Office projects that we are on target in FY06 to surpass the FY04 deficit record. This is not sound fiscal policy. This is budgetary smoke and mirrors' that has saddled our children with debt and left us ill-prepared to make the investments in health care, education, energy and other priorities we need to keep the American economy strong and competitive in the global marketplace."
http://tomallen.house.gov/article.asp?id=476