Kent Conrad: “while I welcome what I have just heard the Senator from Iowa say, no one should be under any illusion that there will…”

“while I welcome what I have just heard the Senator from Iowa say, no one should be under any illusion that there will only be $350 billion in tax cuts provided for in the budget resolution. This budget resolution provides for $1.3 trillion of tax cuts. Focusing on the reconciled tax cuts is only half of the story. It is a very important part of the story because those are the provisions that have special protection. There is a whole other part of the tax cut package part of this budget resolution that gets little reported. We are still left with well over $1 trillion of tax cuts. People keep asserting it is a growth package. This is the work of the people who determine the effect of various packages, the very people who are under contract to the White House, the people who are under contract at the Congressional Budget Office who have looked at the President's plan. This is what they say: Initially the plan would stimulate aggregate demand significantly by raising disposable income, boosting equity values and reducing the cost of capital. However, the tax cut also reduces national saving directly while offering little new, permanent incentive for either private saving or labor supply. Therefore, unless it is paid for with a reduction in Federal outlays, the plan will raise equilibrium real interest rates, "crowd out" private-sector investment, and eventually undermine potential GDP. Not a growth package, it is a package that hurts economic growth.”