Ezra's post is an example of exactly what's wrong with Jonathan Chait's article on supply-side economics. Chait, and others writing in this vein, refute the strongest claims of the supply-side movement: that tax cuts produce astonishing growth, or that cutting taxes can increase tax revenue. Then they imply that they have thereby refuted all the economic claims in favor of tax cuts, which they haven't, not even close. I haven't read the book, and the article may well have gotten muddy in the trimming. But from the article, it's not even clear that Chait is familiar with the moderate arguments about things like deadweight loss and fiscal stimulus that motivate many academics in favor of tax cuts. He certainly doesn't address, much less refute them. But nonetheless, a lot of people seem to have gotten the misimpression that there are no serious intellectual, economic arguments in favor of tax cuts. There are.
I agree that any Laffer-type arguments offered by the administration are wrong, and should not be taken seriously, and that Republicans should be pressure not to deploy them. But contra Ezra, it's not some sort of weird, uniquely awful Republican behaviour to sell your policies using dubious economic claims. I'll never forget being asked, in an interview with BET, how much Clinton's Urban Empowerment Zones contributed to economic growth in the 1990s. The correct answer--not in any measurable way--met with a great deal of skepticism, since the producer had seen Bill Himself making grandiose claims about the effects on growth and (slightly more plausibly) poverty. Politicians often assemble policies for a variety of reasons, and then sell them using the least plausible, but most appealing, rationale.
Any social worker, for example, will tell you that a core of their clients have no reasonable chance of getting off support. They have poor impulse control, drug habits, extraordinarily bad planning skills, and often, a rather lackadaisical attitude towards work. But almost no social worker ever says, "We need welfare benefits because these people are too screwed up to hold a job", because Americans do not care to give money to people whom they perceive as not trying. Whether this is appalling dishonesty, or merely putting your best foot forward, depends much on how you feel about the underlying program.
The actual rationale behind tax cuts was multiple. There was a fairness argument about how much of peoples' lives they should be compelled to spend laboring for the government; a fiscal stimulus argument about an economy sliding into (or just out of) recession; a deadweight loss argument; an efficiency argument about the structure of the tax code . . . these were serious beliefs, and they did, in fact, all get advanced during the policy debate. But liberal commentators have ignored all of these in favor of swiping down the few claims that are easy to refute.
OK, but you need the "extreme" argument to justify cutting taxes without cutting spending. And that's what the modern Republican party is about.
No you don't; there's a straightforward Keynesian argument as well.
There is one obvious argument for cutting taxes... a large amount of government spending is pork, wasted, or silly. Unfortunately, nobody who is in charge of spending cares.
EI
There is one obvious argument for cutting taxes... a large amount of government spending is pork, wasted, or silly.
That's an argument for cutting spending. There's an old, exploded argument that tax cuts would "starve the beast". In fact, now that spending is completely divorced from revenue levels, the beast has gone from voracious to insatiable.
There's no Keynesian argument for tax cuts that's exempt from also considering spending. Keynesian tax cuts cause deficits. Those deficits represent future taxes. The Keynesian argument is just that the higher spending propensity is more useful for the economy now (e.g. if there's a recession). It is not an exemption from the essential principle that the purpose of raising tax revenue is to finance government spending.
The Keynesian argument can only work some of the time, not all of the time. (Maybe it can't work at all for the federal government if the Fed is doing its job properly.) The modern Republican party is for tax cuts without spending cuts all of the time.
The actual rationale behind tax cuts was multiple. There was a fairness argument about how much of peoples' lives they should be compelled to spend laboring for the government
This is, obviously, an argument for matching spending cuts with tax cuts. Cutting taxes without cutting spending is just a shift, and is not "fair" to the generation that will have to pay interest on the debt accrued on the difference.
"Compelled" and "laboring" are such value-neutral words, aren't they? You'd think we live in a state in which we have no say over levels of taxation. There's an easy way to pay less taxes -- work less. Or move to a tax haven.
The idea of tax cuts as fiscal stimulus has nothing to do with supply side economics. It is quite a mainstream position to argue that tax cuts can boost demand, but to claim that the incentive effects are of an order of magnitude that can affact growth rates goes a little too far. And, by the way, if you believe in fiscal stimulus, the best way of doing this (bigger multipliers) is through increasing government spending -- but that goes against the tax cutting ideology. I fear Chait is right-- it's an ideology that grasps at whatever justification it can.
Fair enough, Mike... I made the mistake of trying to apply logic to government.
EI
Pithlord, P. O'Neill, you learned a different kind of Keynesianism from the kind they taught in New Haven (which is to say, you are wrong). There's no reason the government can't run deficits forever, so long as the economy is expanding (say, due to the fiscal stimulus) faster than the national debt is growing. Do you think that on Judgment Day God comes and demands immediate payment on his Treasury Bonds?
y81, I think that world of sustainable deficits blows up in one's face way sooner than Judgment Day. For one thing there's the rollover risk on all that debt. George Bush has been way lucky in that he could pile up trillions of debt in nominal dollars -- and find foreign suckers to buy it. But part of the adjustment mechanism is inflation/$ depreciation -- something that he doesn't talk about very much. Once the creditors get burned the interest rate on new debt will rise and then the deficit calculus gets ugly fast. But all after 2008, probably.
You are getting crushed in this argument. Matt Y's latest post is devastating. Just stop.
Matt Y has clearly demonstrated that most of the republican party, including the president and vice president, repeatedly say that tax cuts increase revenue. This is clearly a false claim, because reducing taxes does not increase revenue at anywhere near our current level of taxation. The major claim of Jon Chait is that the republican party is hostage to a crazy economic world view that claims the when you cut taxes, revenues go up. I don't see how this is wrong in any way. You agree that cutting taxes so revenue goes up is clearly crazy. If you are claiming that some parts of his book long proof are slightly misleading, well I can claim that you are missing the forest for the trees and focusing on the least important part of the argument, and that you are deliberately misleading your readers.
Jon Chait is also correct in that he says the supporters of this crazy policy, like you, will stop at nothing to smear rational people in the debate.
mickslam:
Can you point to the smear that I've apparently missed?
"In fact, now that spending is completely divorced from revenue levels, the beast has gone from voracious to insatiable."
For heaven's sake. Please take a valium. The budget deficit for 2006 was but 1.9% of GDP. Now it is a mere 1.4% of GDP. So we are hardly on the verge of fiscal collapse... Now I too wish that President Bush had done more to restrain spending, but lets not go into hysterics.
I have my disagreements with Megan McArdle, but some of the crticisms of her here ought to be refuted.
I. "Matt Y has clearly demonstrated that most of the republican party, including the president and vice president, repeatedly say that tax cuts increase revenue. This is clearly a false claim..."-mickslam
Okay. Republicans sometimes like to trot out the Laffer Curve to justify their policies. They deserve some blame for that. But Megan's point stands: there are other arguments for tax cuts that have a much more solid foundation. That's why it's so easy to point to economists of the highest repute who supported the tax cuts and continue to support them (Prescott, for exampe).
II."Jon Chait is also correct in that he says the supporters of this crazy policy, like you, will stop at nothing to smear rational people in the debate."
She didn't "smear" anyone. She argued, quite rationally in my view, that those like Chait who ignore the substantive arguments for tax cuts while attacking only he weakest ones are not making their case very persuasively.
There are deadweight losses associated with high taxes (except lump sum taxes and Pigouvian taxes)and reducing those taxes will also reduce the deadweight lossses.
Isocrates,
Good to see you again. We had a discussion that got caught off on Megan's old blog. You had asserted that an earned income tax and a consumption tax were different because of "intertemporal substitution of consumption."
Can you explain that further?
Tom
Megan, you're being a little unfair to Chait. You say "Chait, and others ...imply that they have thereby refuted all the economic claims in favor of tax cuts, which they haven't, not even close."
That's not true. There are a lot of things wrong with Chait's article -- the reliance on the biographies of two nutty characters, the failure to address the more technical aspects like deadweight loss -- but Chait doesn't say, nor does he "imply", that he's debunked all the arguments for tax cuts. In fact, he says
"The government can't simply raise tax rates as high as it wants without some adverse consequences. And there have been periods in American history when, nearly any contemporary economist would agree, top tax rates were too high"
"there are justifiable conservative arguments to be made on behalf of reducing tax rates and government spending"
"You could plausibly argue that, say, Reagan's tax cuts contributed around the margins to the economic growth of the 1980s"
"None of this is to say that those high tax rates caused the postwar boom. On the contrary, the economy probably expanded despite, rather than because of, those high rates. Almost no contemporary economist would endorse jacking up rates that high again"
The germ comes here, and frankly, on the politics, he's right:
"Supply-siders have taken the germ of a decent point--that marginal tax rates matter--and stretched it, beyond all plausibility". No Republican, for the forseeable future, can advocate tax increases under any plausible circumstances. That is a political handcuff that serves the country poorly, even if you believe in the case for tax cuts generally, which you and I both do. And it's the "monomania" of the supply-siders that is mostly to blame.
Yes. Take an extreme example. Person A and Person B have the same incomes (all earned) but very different saving rates. Specifically, A saves 100% of his income and B saves none of his income.
Under an earned income tax, A and B would pay the same amount in taxes. Under a consumption tax, by contrast, B would pay a lot of tax while A would pay nothing. And he gets to compound his saving tax free indefinitely.
Tom G.:
I think what you are saying is almost correct. A tax on earned income that allows unlimited deductions for savings is equivalent to a consumption tax. But otherwise they are not the same, as my example above illustrates.
Also, for what it's worth, this just in: every one of the Republicans at the debate tonight promised to sign a pledge not to raise taxes except McCain and Giuliani. Pretty strong evidence to me that supply-siders have "taken over the building".
Why not just persuasively argue that tax cuts are usually a good thing, say "Reagan Reagan Kennedy '61 deadweight loss", you know, actually make an argument, rather than taking a pledge to remove the plus-sign from your bag of arithmetical tools?
I think when talking about deifcits, one must exclude the massive Social Security Surplus from the equation as that is money already earmarked for future spending.
And, of course, we all know that because the Social Security trust fund must buy government debt, that it actually raises the total level of debt our government has.
I did some calculations awhile ago. There is a government website with a table going back to 1962 of spending/revenue.
Republicans have the five highest levels of spending (the top four by "small government" Ronald Reagan) and 14 of the top 16 highest spending. They also have the 14 highest deficits and 18 of the highest 19 (exclusive of the SS surplus).
All numbers are counted as % of GDP and "Republican" means a Republican president signed the budget.
Since taxes are ultimately determined by spending and deficits represent future tax increases, the logical conclusion is that Republicans raise your taxes and raise the taxes of future generations even more.
For heaven's sake. Please take a valium. The budget deficit for 2006 was but 1.9% of GDP. Now it is a mere 1.4% of GDP.
What happens if you figure in the off-budget war spending?
Isocrates writes: "Now I too wish that President Bush had done more to restrain spending, but lets not go into hysterics."
Um... "done more"?
Since Dumbya has actually done NOTHING to restrain spending, but has increased it markedly, I just have to wonder if you're on his payroll.
He did. Note that Table 1.2 of the historical tables for FY2008 includes both on-budget and off-budget outlays and receipts.
This is a trivial observation and a meaningless conclusion that could be applied to any action that decreases taxes or increases spending, since taxes could always be lowered if they are above zero. Also, as public debt is never actually repaid in significant amounts, economic growth is significant when looking at long time frames. For example, assuming a given principal amount of debt, it may be better to run small deficits if it promotes growth that causes the debt to shrink relative to GDP. It is an empirical question. There is also the concept of a discount rate. More importantly, $5 trillion in public debt is insignificant compared to unfunded Social Security and Medicare liabililities, which are the paradigmatic Democratic creations.
I think you need to engage Matt's reply to this. Indeed, we heard these arguments a great deal when Bush was pushing his tax cuts, so I don't accept that they're not influential in the Republican party today - a lot of conservatives, as Matt points out, tow this line.
But from the article, it's not even clear that Chait is familiar with the moderate arguments about things like deadweight loss and fiscal stimulus that motivate many academics in favor of tax cuts. He certainly doesn't address, much less refute them.
But Megan, the "moderate arguments" are not arguments that justify the Republican policy of all tax cuts, all the time. Deadweight loss arguments can be made against specific taxes; they cannot be made against the existence of taxes in general. Fiscal stimulus arguments can be made in recessions, not universally. Supply-side economics, to the extent that it is anything more than the "Trojan horse" identified long ago by David Stockman, is not to be confused with mainstream economic tax analysis in any way.
Refuting supply-side economics is important, since supply-side arguments have a stranglehold on the Republican party when it comes to tax policy. A commenter on your earlier anti-Chait thread today demonstrated that every one of the legitimate contenders for the Republican nomination in 2008 (Rudy, Mitt, Fred and John) has explicitly endorsed the supply-side dogma that cutting taxes always increases revenues. Only when we get supply-side loopyness out of the way, or when we get large enough Democratic majorities in Congress that the Republicans don't matter (unlikely, that), will it be possible to have a rational debate on tax policy, in which legitimate arguments about deadweight losses, etc., can be given their proper weight.
"Since Dumbya has actually done NOTHING to restrain spending, but has increased it markedly, I just have to wonder if you're on his payroll."-ML&J
George W. Bush deserves a lot of blame for his prodigal ways, but that doesn't mean the liberal Democrats deserve praise. Bush's worst fiscal mistake by far was the prescription drug benefit (this will prove far more costly over time than the Iraq war, as anyone who has read Larry Kotlikoff's writings would know). And Democrats like Hillary Clinton and Harry Reid did indeed oppose it--but why? They thought it was not sufficiently generous. They wanted a bigger entitlement. So could we please do away with the pretence that the party of Ted Kennedy and Barbara Boxer is now the party of fiscal discipline?
If supply side incentives to increase investment result in larger future productivity and growth, why is it not fair to say that they don't raise the overall aggragate of all forms of taxation?
If supply side incentives weren't true, there's no need to worry about social security and medicare. Just raise the tax rate. Don't worry about substitution effects on the economy and the resulting need to increase other forms of taxes.
Deadweight loss arguments apply to all taxes except, as my commenter noted, Pigouvian taxes. The loss may be large or small, but it is always there. And since the Bush tax cuts were proposed during a recession, a fiscal stimulus argument was perfectly appropriate.
Since war spending and the Social Security and Medicare surpluses have been mentioned above, perhaps we should pause to honor Lyndon Baines Johnson, whose final budget was the first Unified Federal Budget, justified to "bury" the deficits caused by his "guns and butter" policies. We might also honor the Democrat-controlled Congress which passed the first Unified Federal Budget and sent it to LBJ for signature. (We can't let LBJ bask in the glory alone!)
While we are at it, we might as well honor all those legislators and presidents who were complicit in expanding the scope and power of the federal government so far beyond the Powers enumerated for it in the Constitution.
I can't point you to any smears. I can point you to Matt Yglesias, who provides lots of names that slipped Megans mind when talking about people who support supply side economics. Just go to the top bar, look for voices and roll your mouse over it. Matt Y will appear and click on his name. Look for the post that talks about the people that have vocally supported supply side economics in the past beyond George Gilder (!) Megan says is comprehensive, people like the President of the United States, and the Vice president of the United States.
Am I missing something? We had tax cuts. We're in a period of growth. Neither annual budget deficits or the national debt are historically signficant as a percentage of GDP.
Where is this economy that the Republicans supposedly wrecked? Does Jon Chait keep it in a closet and only pull it out to scare dinner guests?
Now I realize that long term indulgence in entitlement programs will bankrupt us, but I ask you liberals, tongue-in-cheek, isn't universal healthcare supposed to take care of that? You know, cost less, cover more, achieve great efficiencies?
"And since the Bush tax cuts were proposed during a recession, a fiscal stimulus argument was perfectly appropriate."
Excepting, of course, that a) the bulk of them were phased in over a period of years, well after the recession had ended [e.g. estate tax repeal] and b) the bulk of them were targeted at the wealthy, who have the lowest marginal propensity to spend. If Bush's tax cuts had taken effect in 2002 and targeted the middle or lower class, there would be a stimulus argument. But many of his tax cuts weren't even proposed until after the recession (see his tax cuts of 2003 and 2004, for instance) and almost all of them gave their benefits primarily to the rich--not exactly a recipe for stimulus.
"What happens if you figure in the off-budget war spending?"
Per CBO's latest projections for 2007, the deficit is expected to be 1.2% of GDP. This estimate includes war spending - which is (wrongly) considered emergency spending and is therefore not included in the Presidential or Congressional budgets, but is not off-budget like social security or the post office.
http://cbo.gov/ftpdocs/85xx/doc8565/08-23-Update07.pdf
The reason the Democrats are now considered the party of fiscal discipline is because compared to Republicans, they really are. Robert Rubin, when he was secretary of the treasury, practically turned fiscal responsibility into a mainstream democratic mantra. And he did exactly what most mainstream economists recommend - countercyclical government policy (i.e., spending restraint and saving during a boom and more liberal spending, including deficit spending, during a downturn).
The easiest way to prove this is to point to the Clinton budgets in the latter half of the 90s. It takes a commitment to good policy to fight the natural political instincts of giving people more of what they want today, policy be damned. But that isn't what the Clinton team did.
Bush and company have shown no similar inclination toward fiscal responsibility, and perhaps most importantly, have shown no ability to think about good policy divorced from political activities. If you read the Price of Loyalty that becomes crystal clear. Why the hell were political hacks like Karl Rove and Karen Hughes even allowed into the same room as the economic policy team during policy formulation meetings?
The truth is that the modern Republican party, to its shame, has endorsed this "politics is war by other means" I cannot tell if they're too ignorant to even understand what fiscal responsibility is or too dishonest to fight it when it comes from their own party leaders. No matter what the answer to this question, they have lost all the benefit of the doubt when it comes to economic matters.
Well, yes and no.
Dan Miller,
It is very difficult to cut taxes for those who pay no taxes in the first place; ie, the lower income ~50% of the population.
Surely, you would not advocate reducing SS and Medicare taxes for that lower 50%, thus turning the "crown jewels" of liberalism into welfare programs.
On the fiscal stimulus:
First, that was not the justification at the time. And when Robert Reich tried to push Clinton into a large fiscla stimulus, he was attacked by Republicans. Of course, Reich favored an increase in spending, which (as you know) provides far larger fiscal multipliers than tax cuts. Bottom line: if you really want fiscal stimulus, you will do it through government spending. Warning: ideology alert!!!
Second, who says fiscal stimulus works anyway? Don't you think consumers are Ricardian, at least in part? A tax cut today, with constant or rising government spending, means I'm no better off, so I won't consume more. I think the whole fiscal stimulus arguments after 2001 are way overblown. What inflated economy was the Fed's bubble-making machine and the housing sector.
The Laffer argument is the only argument that actually works. Fiscal stimulus is discredited Keynesianism.
The Laffer argument is that tax cuts generate higher tax receipts only when taxes are too high.
Republican androids hate the Laffer argument, because it admits that taxes have a naturally optimal rate somewhere above 0%.
Actually, I would have no problem with revisions in payroll taxes (lowering rates combined with raising or eliminating the cap on taxable income)--in fact, this isn't an uncommon position for liberals. See e.g. here, or here.
"And since the Bush tax cuts were proposed during a recession, a fiscal stimulus argument was perfectly appropriate."
Why do you keep saying stuff that is just not true?????
the Bush tax cuts were PROPOSED during a BOOM - explicitly, during late 1999. The whole original point was that we had all this surplus money, we should give it back to the people. Sure, they were "enacted" during a recession, but that just refutes your point - for the GOP cutting taxes is itself the goal, and these other economic arguments that require context are crap.
Someone better inform Ben Bernake, Alan Greenspan et al that fiscal stimulus is discredited. Because they've been actually using this as part of the way they've helped the modern economy become much more stable than any previous era of human history. And someone better go back and tell those factory workers during WWII that their jobs weren't based on government demands for things like tanks and butter, but was merely and illusion.
All kidding aside, it is crazy to argue that the government spending somehow doesn't raise aggregate demand. My guess is that Boeing and Lockheed wouldn't be doing nearly as well as businesses if they had to rely on private citizens buying stealth bombers or Raptors. Or that International Paper doesn't benefit from the post office.
The point is that lots of business are viable precisely because of government-generated demand, and government-supplied services. And the government often in the best position for supplying common infrastructure that benefits us all economically, but would be nearly impossible to pull off privately. Infrastructure like, say, the internet.
"they've helped the modern economy become much more stable than any previous era of human history."
--- A. I don't kiss the ring of these guys B. whatever the modern economy is, it sure as hell ain't stable. Oil was $2-$3/barrel for decades before the modern economy.
"lots of business are viable precisely because of government-generated demand, and government-supplied services."
----- In your model then, there is no difference between buying a bomb and buying lunch?
In my model, to buy a bomb, you have to tax the lunch. But nobody can eat the bomb.
Next blog by Megan will explore the dimwittedness of scientists who, claiming that there can be no affect of the position of stars on a person's life on earth, dismiss Astrology entirely, thereby ignoring the well known fact that the people who believe in Astrology are able to cope with their misfortunes precisely because of this belief.
Deadweight loss arguments apply to all taxes except, as my commenter noted, Pigouvian taxes. The loss may be large or small, but it is always there.
However, since all taxes create deadweight loss, deadweight loss arguments are not an argument for cutting the level of taxation. Taxes are necessary--the price of living in a civilized society must be paid. Determining the level of taxation needed to pay that price is one issue. Determining the most efficient way to collect that needed level is a second issue. Deadweight loss arguments apply to the second issue only.
And since the Bush tax cuts were proposed during a recession, a fiscal stimulus argument was perfectly appropriate.
Bush made his tax cut proposal as a candidate, long before the recession began. As some here may recall, he essentially got into a bidding war with Steve Forbes for the mantle of
"biggest tax cutter." Moreover, as many economists pointed out at the time, the Bush tax cut proposal, regressive and back-loaded as it was, was very ill-designed to serve as a short-term Keynesian stimulus.
wellbasically wrote:
"--- A. I don't kiss the ring of these guys B. whatever the modern economy is, it sure as hell ain't stable. Oil was $2-$3/barrel for decades before the modern economy."
If anything, the huge spike in oil prices underscores how much more robust and stable the modern economy is since the Keynsian influence. Large flucuations in commodity prices used to produce enormous dislocation, often leading to unrest and poverty. Think of the tulip bubble in Holland, or the Irish potato famine or the Spanish gold hyperinflation, or the California gold rush, etc etc etc.
And yet, here we are in 2007 living largely the same way, and with the same material living conditions, as we did before the dot.com bust or the 200% increase in oil prices. That is just astonishing when viewed in historical context. So maybe you should hold these guys in just a wee bit higher esteem.
And the bombs versus lunches example is silly. Every modern nation on Earth uses public resources to take on collective action problems and create infrastructure that is economically beneficial to all. We can argue were the line should be drawn, but this issue has long been settled and we're all richer and more prosperous for it.
"Next blog by Megan will explore the dimwittedness of scientists who, claiming that there can be no affect of the position of stars on a person's life on earth, dismiss Astrology entirely, thereby ignoring the well known fact that the people who believe in Astrology are able to cope with their misfortunes precisely because of this belief" - gregory on matts blog
I."the bulk of them were targeted at the wealthy, who have the lowest marginal propensity to spend..."
That also means they have the highest marginal propensity to save. And that is one reason why conservatives and classical liberals often favor a flat tax. Highly progressive taxation reduces saving. But less saving means higher real interest rates, lower investment and lower productivity growth over the long run.
II. "The reason the Democrats are now considered the party of fiscal discipline is because compared to Republicans, they really are. Robert Rubin, when he was secretary of the treasury, practically turned fiscal responsibility into a mainstream democratic mantra."
You seem to think that Robert Rubin's ideas are still dominant in the Democratic Party. Would that it were true. The power in that party now is with the Daily Kos and MoveOn mobs--and they don't think highly of Rubin.
To get a measure of how far Democrats have moved away from "Rubinomics", just listen to their leading candidates. Barak Obama was recently enthusing about deficit spending and Hillary Clinton and John Edwards have been pandering ever more to the protectionists.
Isocrates wrote:
"You seem to think that Robert Rubin's ideas are still dominant in the Democratic Party. Would that it were true. The power in that party now is with the Daily Kos and MoveOn mobs--and they don't think highly of Rubin."
Since I don't read Daily Kos and only know of MoveOn's antiwar activities, I cannot effectively evaluate this point, except to say that I haven't seen a sustained economic policy agenda from either of these groups. They are political actors and not policy wonks, I wouldn't trust them to formulate policy because of it. And certainly protectionist policies, usually barely disguised attempts to protect parochial interests, need to countered.
So given these facts, I'm going to announce that the szr primary winner will be the first candidate that (a) announces Rubinomics (or something very similar) as their official economic policy doctrine; and (b) proposes an intelligent and comprehensive way out of Iraq. No residual forces, no fuzzy timelines.
Isocrates--Megan claimed that there was a good rationale for the Bush tax cuts, namely that they would stimulate the economy out of the recession of 2002. I replied, saying that the tax cuts mostly didn't take effect until after the recession was over, and were the least likely to stimulate the economy, because the money would be saved, not spent, by the ultra-wealthy who received the largest cuts. Thank you for proving my point, and undercutting Megan's.
Dan, there were multiple tax cuts, with varying rationales offered, which were variously good or bad. But the fiscal stimulus argument can be applied at the tail end of a recession, the tax cuts that were offered during the recession were more broad based than the ones that followed, and while they were less than ideally structured, this did not, as you imply, entirely eliminate the benefit; it merely lessened it somewhat.
Lane wrote: Also, for what it's worth, this just in: every one of the Republicans at the debate tonight promised to sign a pledge not to raise taxes except McCain and Giuliani. Pretty strong evidence to me that supply-siders have "taken over the building".
A very basic example of deductive fallacy. Ya think maybe the candidates were promising that because it resonates well with their base? Remember Bush I's eventually-infamous "Read my lips"?
Promises to raise taxes never got anyone elected, and keeping quiet about the issue sometimes backfires. Saying what's popular, and then doing whatever, are a classical tradition of all politics.