More careful microeconomic analyses give similar
conclusions. Given the structure of the 2001 tax cut,
researchers have generally found that the positive
effects on future output from the impact of reduced
marginal tax rates on labor supply, human capital
accumulation, private saving and investment are
outweighed by the negative effects of the tax cuts via
higher deficits and reduced national saving. Gale and
Potter (2002) estimate that the 2001 tax cut would have
little or no net effect on GDP over the next 10 years
and could have even reduced it; that is, they find that
the negative effect of higher deficits and the decline in
national saving would outweigh the positive effect of
reduced marginal tax rates.