Laffer to Newsmax: Biden's BBB Costs 'Probably $6 Trillion or More'
Economist Arthur Laffer is considered the father of supply-side economics, or the trickle-down theory. (Win McNamee/Getty Images)
Arthur Laffer, the economist who has advised four presidents, told Newsmax on Tuesday that President Joe Biden's ''Build Back Better'' plan will cost more than three times the $1.75 trillion the White House asserts it will cost.
''I believe the actual number is far higher because the spending components of BBB grossly underestimate the damage they'll do to the economy,'' said Laffer, best known as the father of the ''trickle-down theory'' and the eponymous ''curve'' demonstrating that cutting tax rates raises revenue.
Laffer made his estimate to us as Congress waits for the Congressional Budget Office to score the administration's legislative package.
He specifically cited the recent findings of the Penn Wharton School at the University of Pennsylvania, which concluded that ''the total cost over 10 years is instead $4.26 trillion. Transfers and tax expenditures make up 66 percent of new spending under the permanent spending scenario.''
Penn Wharton's study noted that the ''largest proportion of this spending is on the CTC extension, which totals $1.8 trillion in new spending over the budget window.''
''The Premium Tax Credit expansion is the next largest expenditure in Transfers and Tax Expenditures,'' according to Penn Wharton, which will require ''$385 billion of new spending over the budget window. Extending the EITC [earned income tax credit] results in $125 billion of new spending.''
Laffer also told us, ''I believe the tax pay-fors will actually lose money.''
He noted that the BBB would raise income taxes on high earners, raise the top statutory and top corporate rate, plus a number of ''progressive'' taxes on capital gains, dividends and earned interests.
Although BBB boosters say raising taxes on high earners will increase tax revenue over the short and long term, Laffer insisted that ''their conjecture is simply not true. Whenever top tax rates have been raised in the U.S., tax revenues from the highest earners have fallen — every single time, from 1913 to the present.''
''And whenever top tax rates have been raised, the economy falters,'' he added, ''Likewise, when top tax rates have been lowered, tax revenues from the rich increase and the economy prospers. This has been true as well throughout the history of the U.S.
''These proposed taxes will not lead to higher revenues but will rather lead to markedly less growth and less prosperity for every American.''
''In all, if passed as is,'' Laffer told us, ''the number I would use is probably $6 trillion or more.''
John Gizzi is chief political columnist and White House correspondent for Newsmax. For more of his reports, Go Here Now.