White House economic adviser R. Glenn Hubbard testified before the Joint Economic Committee on Thursday to defend President Bush’s latest economic stimulus proposal.
Hubbard, who will leave his post as chairman of the White House Council of Economic Advisers this spring, has been a major proponent of Bush’s efforts to cut taxes. He continued to press the issue yesterday.
The bulk of Hubbard’s testimony was a pitch for the president’s call to eliminate the double taxation of corporate dividends and to create economic growth through $674 billion worth of tax cuts, the idea being tax breaks for dividends will drive up stock prices and kick-start the lagging market.
Hubbard, who plans to return to life as a Columbia University professor, came equipped with charts and graphs to illustrate his point. But those who are not familiar with his “Principles of Economics” textbook had to ask for additional clarification when attempting to nail down solid numbers.
“If I don’t understand your chart, frankly a lot of people aren’t going to understand it,” said Sen. Bob Bennett (R-Utah), chairman of the Joint Economic Committee.
Hubbard also faced questions about who would benefit under the proposal.
“Even though workers may not write a check to the IRS for dividend taxes, all of us workers still pay part of the dividend tax in the form of lower wages, because the dividend tax reduces the amount of capital in the economy,” Hubbard said.
Bennett, a former CEO of a small business, cited his old tax statements that showed he earned $120,000, but company earnings passed through to his personal income to the tune of $1 million. He said half of the households in the top 1 percent are small-business owners like himself.
Rep. Pete Stark (D-Calif.), meanwhile, expressed doubt that further tax cuts are what’s best of the economy, saying he found the president’s plan unfair to middle- and low-income earners since the average family would likely only receive “a buck or two.” He questioned whether investing in health care was not a better economic stimulus for all people.
Hubbard responded that “the president’s proposal is a permanent solution whereas Democratic plans are only loosely connected to the problems and would not be the solution.”