The New York Times reported on Thursday that Senate Republicans applied pressure
to the nonpartisan Congressional Research Service (CRS) in September,
successfully persuading it to withdraw a report finding that lowering marginal
tax rates for the wealthiest Americans had no effect on economic growth or job
"The pressure applied to the research service comes amid a broader Republican
effort to raise questions about research and statistics that were once trusted
as nonpartisan and apolitical," the Times reported. Democrats in Congress,
however, have resurfaced the report and published it in full. It can be read
Republicans told the Times they had issues with the tone, wording and scope of
the report, but they clearly objected most strongly to its findings, which
undermine the governing fiscal philosophy of the party, that tax cuts for the
wealthy will spur growth and benefit everybody.
GOP officials told The Times that the decision by the CRS came after a
cooperative discussion, but Democrats have suggested that the move is part of a
broader effort by Republicans to squelch legitimate research that runs counter
to their economic principles.
The CRS report, by researcher Thomas Hungerford, concluded:
The results of the analysis suggest that changes over the past 65 years in
the top marginal tax rate and the top capital gains tax rate do not appear
correlated with economic growth. The reduction in the top tax rates appears to
be uncorrelated with saving, investment, and productivity growth. The top tax
rates appear to have little or no relation to the size of the economic pie.
However, the top tax rate reductions appear to be associated with the
increasing concentration of income at the top of the income distribution. As
measured by IRS data, the share of income accruing to the top 0.1% of U.S.
families increased from 4.2% in 1945 to 12.3% by 2007 before falling to 9.2% due
to the 2007-2009 recession. At the same time, the average tax rate paid by the
top 0.1% fell from over 50% in 1945 to about 25% in 2009. Tax policy could have
a relation to how the economic pie is sliced‹lower top tax rates may be
associated with greater income disparities.
Rep. Sandy Levin of Michigan, the top Democrat on the Ways and Means Committee,
demanded the CRS explain its decision. "The impartial research and advice
provided by CRS experts informs and strengthens the work of Congress. However,
this valuable role hinges on the impartiality of CRS analysts and their freedom
from political pressure. As with other non-partisan institutions, subjecting CRS
analysts to political considerations undermines the legislative process and the
American people¹s trust in it," Levin wrote in a letter to CRS. "Therefore I was
deeply disturbed to hear that Mr. Hungerford¹s report was taken down in response
to political pressure from Congressional Republicans who had ideological
objections to the report¹s factual findings and conclusion."
(Scroll down for Hungerford's response in the UPDATE.)
The report is extensive, but the reasoning behind its conclusion is fairly
straightforward. The richest Americans are the least likely to spend extra money
they get as a result of a tax cut, and are more likely to save it or invest it
offshore. Those on the lower end of the economic spectrum, meanwhile, are the
most likely to spend transfer payments they receive from the government.
A release by the Democratic Policy & Communications Center on Wednesday accused
Republicans of attempting to bury the report because its "findings undermine a
central tenet of Republican party orthodoxy on taxes." They included a copy of
the original report, which is available below:
CRS Report: Top Tax Rates
UPDATE: 5:45 p.m. -- Thomas Hungerford, the CRS researcher who produced the
report, told HuffPost that he stands by it. "Basically, the decision to take it
down, I think The New York Times article basically got it right, that it was
pressure from the Senate minority to take it down," Hungerford said. "CRS
reports go through many layers of review before they're issued and as far as the
tone and the conclusions go, people who specifically look at the writing and the
tone said it was okay. So it's not going to be that and as I can tell you
outright, I stand by the report and the analysis in the report."
Hungerford said that he had never experienced suppression like this before, and
he pushed back on the GOP argument that he had only looked at the effect of tax
cuts in the year immediately following enactment. Regardless, he said,
Republicans argue that tax breaks for the rich will bring an immediate benefit
to the economy, so their criticism is inconsistent. "I checked out three years
and then five years and found that no, it doesn't change the results or the
conclusion of my paper. So in a way, I find it interesting that they keep
talking about the need to lower the top tax rate in order to stimulate the
economy now," he said. 'It sounds like they're being a little inconsistent here."
Despite the pressure, Hungerford said he'll continue doing his job in a
nonpartisan way. "I'm not going to change. My job is to do economic analysis on
issues that the Congress is comparing and quite frankly, I'm going to continue
doing that. That's my job," he said.
The Times reported that Hungerford has given $5,000 this election cycle to
Democrats. HuffPost asked if that biased his report in any way. "I leave any
political baggage at the door when I walk into my office and pick it up on my
way out. I'm there to provide help to members of both parties, which I do,"