WASHINGTON (Reuters) - Federal Reserve Chairman Ben Bernanke said tax cuts can spur greater economic activity and boost economic efficiency, but generally do not wholly pay for themselves.
"Tax cuts that reduce marginal tax rates will likely improve the efficiency of the economy and boost overall economic activity," Bernanke said in an April 18 letter to Rep. Brad Sherman (news, bio, voting record).
"Because they increase economic activity, cuts in marginal tax rates typically lead to revenue losses that are smaller than implied by so-called static analyses, which hold economic activity constant," he said. "However, under normal conditions, tax cuts do not wholly pay for themselves."
The letter, released by Sherman's office on Wednesday, was in response to written questions the California Democrat submitted in connection with a February 15 hearing on monetary policy at which Bernanke testified.
Things that he wouldn't even say if he was only a former CEA, and not head of the fed.
Here we see Greg Mankiw and Glenn Hubbard still being elliptical as Brad DeLong puts it. The sad thing is they had the gunner's chair, they had the inside job, and they could not deliver. Disappointing.
Keywords: Taxes, ECO120