After GOP doubt, tax-rates report pulled

WASHINGTON — The Congressional Research Service has withdrawn an economic report that found no correlation between top tax rates and economic growth, a central tenet of conservative economic theory, after Senate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.

The report questions the premise that lowering the top marginal tax rate stimulates economic growth and job creation.

“This has hues of a banana republic,” 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, a spokesman for the Senate Republican leader, Mitch McConnell of Kentucky, said McConnell and other senators “raised concerns about the methodology and other flaws.” Stewart added that people outside Congress had also criticized the study and that officials at the research service “decided, on their own, to pull the study pending further review.”

Aides to McConnell presented a bill of particulars to the research service that included objections to the use of the term “Bush tax cuts” and the report’s reference to “tax cuts for the rich,” which Republicans contended was politically freighted.

They also protested on economic grounds, saying that the author, Thomas 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 take into account other policies affecting growth, such as the Federal Reserve’s decisions on interest rates.

Congressional aides and outside economists said they were not aware of previous efforts to discredit a study from the research service.

“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 Rep. Sander Levin of Michigan, the 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 he said the analysis did examine policy time lags and controlled for several outside factors.

Janine D’Addario, a spokesman for the Congressional Research Service, would not comment on internal deliberations over the decision.

A person with knowledge of the deliberations, who requested anonymity, said the Sept. 28 decision to withdraw the report was made against the advice of the research service’s economics division, and that Hungerford stood by its findings.

Hungerford, a specialist in public finance who earned his economic doctorate from the University of Michigan, has contributed at least $5,000 this election cycle to a combination of President Barack Obama’s campaign, the Democratic National Committee, the Democratic Senatorial Campaign Committee and the Democratic Congressional Campaign Committee.