"Sure. But first of all, it’s not clear that that would add trillions to the deficit, because I really believe that if we expand the base of the economy, which we could do by selectively lowering some taxes, you have a broader base on which to apply the tax."
Pat Toomey, Republican Senate candidate.
Senate Minority Leader Mitch McConnell also stated, "There's no evidence whatsoever that the Bush tax cuts actually diminished revenue." Toomey and McConnell are pushing the debunked trickle down economic theory. The reality is the Bush tax cuts created less revenue growth than the Reagan or Clinton administrations.
David Stockman was Ronald Reagan's former director of the Office of Management and Budget. In an interview, Stockman told journalist William Greider that trickle down economics was rebranded supply-side economics. It is hard to sell to the middle class and poor people that tax cuts for the rich will "trickle" down to them.
"It's kind of hard to sell 'trickle down,' so the supply-side formula was the only way to get a tax policy that was really 'trickle down.' Supply-side is 'trickle-down' theory."
In another interview, Stockman said Reagan intentionally used trickle down economics and increased spending as part of his plan to cut New Deal and Great Society programs he loathed.
Back in 1981 David Stockman was the wonderkid of the Reagan administration–the director of the Office of Management and Budget who’d craft in actual budgets the trickle-down miracle Reagan had promised on the campaign trail: lower budgets, lower spending, higher tax revenue. But trickle-down economics was a wish, not a reality. It’s never worked. Lower taxes don’t generate more revenue. They generate deficits.
Reagan knew it. So did Stockman. So did their guru, Friederich von Hayek. The deficits were intentional all along. They were edsigned to “starve the beast,” meaning intentionally cut revenue as a way of pressuring Congress to cut the New Deal programs Reagan wanted to demolish. “The plan,” Stockman told Sen. Daniel Patrick Moynihan at the time, ” was to have a strategic deficit that would give you an argument for cutting back the programs that weren’t desired. It got out of hand.”
Reagan mission was the same as Grover Norquist's drown government in a bathtub quote. Reagan and Norquist didn't really believe tax cuts would magically create surpluses. The new generation of Tea Party Republicans coming up learned economics from talk radio, Republican stump speeches and the National Review. The new breed of Republican candidates are so economically stupid that they actually believe the big lie that is trickle down economics. Toomey has a background in banking. Toomey isn't stupid about economic policy. He is just as cynical as Reagan and Norquist.
First, your headline talks about economic growth - but your article talks about revenue growth.
ReplyDeleteI don't think any current Republicans talk about cutting taxes so the government has more revenue. Most Republicans talk about cutting taxes so government has LESS revenue.
However, anyone claiming the 1990s economic boom was caused by the Bush(41) tax increase is "post hoc ergo propter hoc" - and a fallacy.
In the mid to late 1990s, the REPUBLICAN leaders in Congress passed balanced budgets. Clinton never proposed a balanced budget, but had to accept cuts in spending forced by the GOP leaders.
What does that mean? Well, for starters it meant the government was selling less debt - so investors had to look elsewhere. The dot-com bubble was caused by a surplus of private sector money not being used to finance deficit spending.
I have no problem with NOT cutting taxes... but we absolutely have to cut spending at the federal level.
Jim, the first part of the post deals with how tricle down economics doesn't spur growth. If you listen to Marco Rubio and other Republican candidates they say the Bush tax cuts will boost the economy. The evidence isn't there. The second part is why Republicans created the terms trickle down economics and supply side economics. I haven't heard a Republican sell extending the Bush tax cuts as creating a surplus. They would be laughed at. They are using the bad economy to sell the Bush tax cuts. Obama already signed the Make Work Pay tax cuts.
ReplyDelete"Clinton never proposed a balanced budget, but had to accept cuts in spending forced by the GOP leaders."
What about the Deficit Reduction act of 1993. Clinton's office proposed that and didn't get a single Republican vote. It passed with Al Gore as the tiebreaker. Bob Woodward's book The Agenda details Clinton, Rubin, Reich, and Tyson. James Carville and Paul Begala were pissed at Rubin because they wanted more money for social programs.