GOP's withdrawal of report on tax rates raises questions

Economic stimulus found lacking when rich receive a break

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WASHINGTON -- The Congressional Research Service has withdrawn an economic report that found no correlation between top tax rates and economic growth, a central tenet of conservative theory, after Senate Republicans raised concerns about the paper's findings and wording.

The decision, made in late September against the advice of the agency's economic team leadership, drew almost no notice at the time. Sen. Charles Schumer, D-N.Y., cited the study a week and a half after it was withdrawn in a National Press Club speech on tax policy.

But it could actually draw new attention to the report, which questions the premise that lowering the top marginal tax rate stimulates economic growth and job creation. "This has hues of a banana republic," Mr. Schumer said. "They didn't like a report, and instead of rebutting it, they had them take it down."

Republicans did not say whether they had asked the research service, a nonpartisan arm of the Library of Congress, to take the report out of circulation, but they were clear that they protested its tone and findings.

Don Stewart, spokesman for Senate Minority Leader Mitch McConnell, R-Ky., said Mr. McConnell and other senators "raised concerns about the methodology and other flaws." Mr. Stewart said people outside Congress also criticized the study, and that research service officials "decided on their own to pull the study pending further review."

McConnell aides presented a bill of particulars to the service that included objections to the report's use of the term "Bush tax cuts" and its reference to "tax cuts for the rich," which Republicans contended was politically freighted.

They also protested on economic grounds, saying the author, Thomas L. Hungerford, was looking for a macroeconomic response to tax cuts within the first year of the policy change, without sufficiently taking into account the time lag of economic policies. Further, they complained that his analysis did not consider other policies affecting growth, such as Federal Reserve decisions on interest rates.

"There were a lot of problems with the report from a real, legitimate economic analysis perspective," said Antonia Ferrier, spokeswoman for the Senate Finance Committee's Republicans. "We relayed them to CRS. It was a good discussion. We have a good, constructive relationship with them. Then it was pulled."

The pressure applied to the research service comes amid a broader GOP effort to raise questions about research and statistics once trusted as nonpartisan and apolitical. The Bureau of Labor Statistics will release October unemployment figures today, a month after some conservatives denounced its last report as politically tinged to abet President Barack Obama's re-election. When the bureau suggested that its October report might be stalled by Hurricane Sandy, some conservatives immediately speculated that politics were at play.

Republicans have also tried to discredit the private Tax Policy Center ever since it declared that Republican presidential challenger Mitt Romney's proposal to cut tax rates by 20 percent, while protecting the middle class and not increasing the deficit, was mathematically impossible.

For years, conservatives have pressed the nonpartisan Congressional Budget Office to factor in robust economic growth when it is asked to calculate the cost of tax cuts to the federal budget.

Congressional aides and outside economists said they were unaware of any prior effort to discredit a research service study.

"When their math doesn't add up, Republicans claim that their vague version of economic growth will somehow magically make up the difference. And when that is refuted, they're left with nothing more to lean on than charges of bias against nonpartisan experts," said Michigan Rep. Sander Levin, ranking Democrat on the House Ways and Means Committee.

Jared Bernstein, a former economist for Vice President Joe Biden, conceded that "tax cuts for the rich" was "not exactly academic prose," but said the analysis did examine policy time lags and controlled for several outside factors, including monetary policy. "This sounds to me like a complete political hit job and another example of people who don't like the results and try to use backdoor ways to suppress them," he said. "I've never seen anything like this, and, frankly, it makes me worried."

Congressional Research Service spokeswoman Janine D'Addario would not comment on internal deliberations over the decision. She confirmed that the report was no longer in official circulation.



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