Skip to comments.Itís time to bury supply-side economics
Posted on 06/09/2012 4:07:54 PM PDT by BfloGuy
Its been the prevailing economic philosophy of the Republican Party since Ronald Reagan was elected president in 1980.
Supply-side economics held that reducing marginal tax rates would spur economic growth, create jobs and even generate tax revenue for the government.
And it makes sense in theory: If people keep more of what they make, they would logically work harder, spend more and hire more people, right?
When you listen to supply-siders like Arthur Laffer, Stephen Moore and Larry Kudlow, they always extol the Kennedy-Johnson tax cut of the 1960s and especially President Reagans tax cuts of the 1980s.
But they rarely mention the 1990s or the 2000s.
Maybe thats because those two decades were almost a perfect controlled experiment that shattered their pet theories: President Bill Clinton raised marginal tax rates and the economy boomed and jobs were plentiful. President George W. Bush cut them and we got only modest job growth.
In fact, theres more and more evidence suggesting that lowering marginal tax rates doesnt create many jobs at all.
(Excerpt) Read more at marketwatch.com ...
Critics of tax cuts as economy-stimulators never, ever take note of the effect of Fed policy.
Soon upon taking office, Ronald Reagan got Congress to pass his legendary income tax cuts. The economy promptly went into a tailspin -- one which the Democrats predictably blamed on the same cuts they'd just agreed to.
Never mentioned was the fact that Fed Chairman Volcker (my hero) was reducing the money supply severely to wring out the double-digit inflation of the Carter years. A recession was not only inevitable, it was planned. Reagan understood (our only president to hold an economics degree) and allowed Volcker to continue because he understood that inflation would kill us.
As long as we have a monetary system that allows for the printing or the destruction of money at will, tax cuts cannot be the sole deciding factor in the course the economy will take. Republicans seem clueless and Democrats, of course, remain dishonest in this discussion.
If the money supply remains stable, marginal income tax rate cuts and reductions in taxes on capital will always and everywhere spur economic growth.
Marketwatch is so in the tank for Obama and the democrats. Anybody who takes their investment advise seriously will end up on food stamps.
The major factor in the economic boom of the 90’s was the computer revolution. Every other factor, including the economic machinations of the government were swamped by a tidal wave of economic productivity.
Supply-Side works if the government cuts spending.
“The major factor in the economic boom of the 90s was the computer revolution” WRONG!! The MAJOR factor in the economic boom of the 90s was the FACT of GINGRICH and the US House GOP Class of 1994!
Bingo! What did Bill Clinton do to create the dot-com explosion? Perhaps we should credit AlGore since he was the one who invented the internet? :=)
"clearly had nothing to do?" -- soft and squishy analyses against a supposed hard target.
Unless and until any of these so-called "economics experts" can describe the difference between "supply/demand" and "quantity supplied/quantity demanded" they are just paper tigers.
But also the number of politicians and posters, here and elsewhere, also is close to zero.
*sigh* I remind myself how economically ignorant we are.
It’s time to bury the tax and spend, leftwing rag, Market Watch.
Classic WTF journalism!
Vomit. Can’t wait until someone at Heritage or AEI takes this man to pieces.
That’s the plan.
What a bunch of idiots.
Clinton also created the largest mostly permanent tax increases in American history to date, and introduced the taxing of Social Security Benefits (even though Big Brother keeps reminding us that Social Security income alone is inadequate to live on) Thank you First Rapist. I tried putting ice on it, I still get less than I used to.
And that it also made the Contract with America inevitable is also never mentioned.
If the Federal government spends money by the billions$ 24/7 and grabs control of all the means of useful production in the country (look up 'fascism,') NO FREAKIN' ECONOMIC SYSTEM (other than cognitive dissonance) CAN EVER WORK!
Seldom do people mention the dot com bust or real estate bust when blaming George Bush for slow growth. These disasters had nothing to do with supply side economics. But we do know that trickle down economics does not work, Send massive amounts of money to Washington and hope it “trickles” back to job creating programs.
Tax rates don't mean anything when you wipe out all the hundreds of ways not to pay taxes, and that is what the 86 bill did!!!!
It effectually shut down the home/apartment building market that the wealthy used to convert all their taxable income to long term capitol gains, same for aircraft, machinery, etc. and anything depreciable.
Capital gains rates were cut which leads to supply side prosperity.
Lower taxes leads to more savings which leads to more investment which leads to more productive expenditure which may or may not lead to more demand for labor.The more productive expenditure could lead to more demand for capital goods instead, which might hold down increases in demand for labor.
So one cannot directly link lower taxes to job creation. It helps but does not cause.
Nilly Clinton spent our Cold War winnings and the bounty of the most productive years of the baby boomers and left us penniless.
Naturally, he’s a hero to the left.
I agree which is why I scrupulously refrained from adding creating-jobs into my post. Creating jobs is a function of confidence in the future.
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