just read their analysis of the Bush 2001 budget. The major flaw in their analysis was that the herd of unicorns didn't show up with huge bags of money as was apparently expected.
http://origin.heritage.org/Research/Reports/2001/04/The-Economic-Impact-of-President-Bushs-Tax-Relief-PlanSpecifically, the results suggest that the plan would:
Reduce federal tax revenue by $1.1 trillion from FY 2002 to FY 2011. This would be the largest amount of tax relief in 20 years, and the share of GDP taken by federal taxes would fall from 20.7 percent in FY 2001 to 19.0 percent in FY 2011.
Produce positive economic "feedback" for the Treasury. Static estimates that do not account for the tax relief's influence on the economy suggest that President Bush's plan would decrease revenues to the federal Treasury by $1.7 trillion over 11 years.24 However, a dynamic analysis using the WEFA model suggests that, because the tax relief would increase economic growth and employment, the larger tax base would generate $583 billion in tax revenue that is unaccounted for in a static analysis (see Chart 3). In other words, when the proposed tax relief's effect on economic performance is taken into account, the actual loss to the Treasury is just 66.1 percent of the purely static reduction in tax revenues over 11 years.
Increase federal net interest payments by $272 billion from FY 2002 to FY 2011. Total federal spending would rise by $303 billion because of the higher interest payments and slightly higher inflation adjustments to other federal spending.
Reduce the federal surplus by $1.4 trillion from FY 2002 to FY 2011. Even with higher spending, the total surplus would be $4.2 trillion from FY 2002 to FY 2011. Moreover, because employment and payroll tax revenue will rise, the Social Security surplus would increase by $85 billion and the Medicare Part A surplus would increase by $39 billion, making more resources available over the next 10 years to reform those programs.
Effectively pay off the federal debt. The Bush plan would decrease federal debt to the lowest possible level at which it could be redeemed--$818 billion in FY 2011 (see Chart 4).25 From FY 2001 to FY 2011, federal debt as a percentage of GDP would decline from 30.5 percent to just 4.7 percent under the plan.
Accumulate $1.8 trillion in uncommitted funds.26 Without any tax relief, the federal Treasury will accumulate $3.2 trillion in excess taxes and interest.27 With the substantial tax relief contemplated by the Bush plan, this amount would decline by $1.4 trillion (see Chart 4). The remaining funds would have to be invested with banks and the Federal Reserve or in some other private-sector asset, or used to reform Social Security and reduce payroll taxes.
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