Argument and counter-argument...
Do tax cuts cost...yes or no?
People work to earn an income. Under state and/or federal constitutional authority or by state law, your income is taxed. These taxes provide a source of revenue for state and federal governments. Now, tax cuts are suppose to allow the wage earner to retain more of their income - keep more of what you earn. Regardless of the nature of the economy, generally speaking this is true. However, what tends to happen during a recession or when the government is running a budget deficit is tax cuts reduce the government's revenue. Reduced revenues along with increased state/federal spending equates to debt.
Now, I understand the call for spending cuts, towit, if you're running a deficit the best way to reduce the debt is to reduce the amount of funds given to specific government programs or eliminate them completely. It's clear that in hard economic times, however, very few governing bodies are willing to cut programs they believe are necessary to provide aid to those individuals who are suffering economically. So, since the onset of the October 2008 recession where the deficit was already extremely high, our government had to act quickly in an attempt to inject capital into the economy otherwise face going into a depression. They (the Obama Administration) determined that the best way to do this was via public-private partnerships (meaning government contracts to private businesses) or via providing funds to the States for infrastructor projects. Corporate America - the private sector - could not correct itself because it (our financial sectors) were the problem (i.e., bad mortgage lending, over-extended credit, too much financial risk). That brings us up to today...
Conservatives are tic'd because they consider allowing the Bush tax cuts to expire to be a "tax hike". But as we all know these taxes were due to expire at the end of the year, thereby resetting them back to where they were originally prior to 2003 (which was the second tax reduction authorized by former Pres. G. W. Bush). Compounding their anger is the fact that many entitlement programs, i.e,. unemployment benefits, are being authorized in a downed economy. As such, the combination of tax cuts on top of entitlements are adding to the deficit. How? Because the tax cuts are no longer offset by revenues that taxation without deficit spending would have ordinarily generated. As such, our government has to borrow money in order to make up the difference.
So, yes, where ordinarily tax cuts would not cost the government a penny in spending when the economy is up, they do cost the government when the economy is down. Even if you cut spending in a down economy and still had tax cuts, if the government is running a deficit, eventually they'd have a significant reduction in revenues to work from which is exactly the case we find ourselves in today. To learn more on this matter, read this detailed review from the
Center on Budget and Policy Priorities.