Bruce Bartlett, author of “Impostor: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy,” knows a bit about a supply-side economics — he helped invent it. About 30 years ago, he was the staff economist for then-Rep. Jack Kemp (R-N.Y.), and helped craft a tax plan that was premised on the idea that lower rates could paradoxically lead to more revenue.
That was then. Now, he’s looking around at Republicans bastardizing his principles and appears largely unimpressed. He’s seen supply-side economics “become a frequently misleading and meaningless buzzword that gets in the way of good economic policy.”
Today, supply-side economics has become associated with an obsession for cutting taxes under any and all circumstances. No longer do its advocates in Congress and elsewhere confine themselves to cutting marginal tax rates — the tax on each additional dollar earned — as the original supply-siders did. Rather, they support even the most gimmicky, economically dubious tax cuts with the same intensity.
The original supply-siders suggested that some tax cuts, under very special circumstances, might actually raise federal revenues…. But today it is common to hear tax cutters claim, implausibly, that all tax cuts raise revenue. Last year, President Bush said, “You cut taxes and the tax revenues increase.” Senator John McCain told National Review magazine last month that “tax cuts, starting with Kennedy, as we all know, increase revenues.” Last week, Steve Forbes endorsed Rudolph Giuliani for the White House, saying, “He’s seen the results of supply-side economics firsthand — higher revenues from lower taxes.”
This is a simplification of what supply-side economics was all about, and it threatens to undermine the enormous gains that have been made in economic theory and policy over the last 30 years. Perhaps the best way of preventing that from happening is to kill the phrase “supply-side economics” and give it a decent burial.
One can only hope Bartlett’s piece gets circulated a bit in DC, because every Republican in town has been getting this wrong. Over a brief span in early 2006, the President, Vice President, then-Senate Majority Leader, and then-House Majority Leader all said that all tax cuts pay for themselves. They don’t.
Kevin Drum summarized this nicely: “[Supply-side theory is] now little more than a ritual incantation uttered by the clueless for the benefit of the rabid. It’s time for conservatives to grow up and put away the fairy tales.”
And while they’re at it, the media can give them a hand.
Matt Yglesias noted in a TAP piece this week:
In case Rudy Giuliani’s penchant for cross-dressing had you doubting his conservative bona fides, doubt no more. “I regard myself as a supply-sider for sure,” he told Larry Kudlow on March 27. And just in case you weren’t clear that by “supply-sider” Giuliani meant “know-nothing fool and liar,” he clarified: “[I] watched Ronald Reagan do it and learned it, saw it work. Taxes get reduced, more revenue comes in.”
Taxes get reduced, more revenue comes in. That, to Giuliani, is what it means to be a supply-sider. And a supply-sider is what he proclaims himself to be.
Taxes get reduced, more revenue comes in. It’s a nice idea. Nice, but not true. What’s more, it’s known to be untrue. Reagan did try it, but it didn’t work.
Taxes get reduced, more revenue comes in. Again, this is something Republicans like to say — but it isn’t true, and people who follow politics closely all know it isn’t true. Elections, however, are decided by the broad mass of voters, the vast majority of whom don’t follow politics especially closely. For that, they turn to the professionals — the corps of campaign correspondents working for the country’s major newspapers and television networks.
These professionals do follow politics closely and use their years of experience in the field to write stories that provide meaningful information to their readers. Thus a person who doesn’t follow politics all that closely and reads an article about how Giuliani puts a debunked theory at the heart of his economic policy will come away newly in possession of that key piece of information. “Giuliani: Crank or Liar?” reads the headline, as the author explores whether Giuliani is deliberately misleading people or just too dumb to know the truth. That’s how the papers cover the story, because the papers are in the business of informing their readers about politics. It’s a no-brainer.
I kid, of course.
Of course.