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Itís time to bury supply-side economics
Market Watch ^ | 6/8/2012 | Howard Gold

Posted on 06/09/2012 4:07:54 PM PDT by BfloGuy

It’s 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 Reagan’s tax cuts of the 1980s.

But they rarely mention the 1990s or the 2000s.

Maybe that’s 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, there’s more and more evidence suggesting that lowering marginal tax rates doesn’t create many jobs at all.

(Excerpt) Read more at marketwatch.com ...


TOPICS: Business/Economy; Government; News/Current Events; Philosophy
KEYWORDS: wisconsinshowdown
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The author conveniently ignores the Federal Reserve. Bill Clinton did raise income tax rates only to see the economy -- eventually -- improve. But it was Alan Greenspan's money-printing fervor combined with the 1997 capital gains tax cut that threw the economy into high gear -- not the tax hikes.

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.

1 posted on 06/09/2012 4:07:57 PM PDT by BfloGuy
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To: BfloGuy

Marketwatch is so in the tank for Obama and the democrats. Anybody who takes their investment advise seriously will end up on food stamps.


2 posted on 06/09/2012 4:14:59 PM PDT by Ramcat (Thank You American Veterans)
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To: BfloGuy

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.


3 posted on 06/09/2012 4:21:09 PM PDT by oldbrowser (They are marxists, don't call them democrats)
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To: BfloGuy

Supply-Side works if the government cuts spending.


4 posted on 06/09/2012 4:22:31 PM PDT by dfwgator
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To: oldbrowser

“The major factor in the economic boom of the 90’s was the computer revolution” WRONG!! The MAJOR factor in the economic boom of the 90’s was the FACT of GINGRICH and the US House GOP Class of 1994!


5 posted on 06/09/2012 4:26:26 PM PDT by US Navy Vet (Go Packers! Go Rockies! Go Boston Bruins! See, I'm "Diverse"!)
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To: oldbrowser
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.

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? :=)

6 posted on 06/09/2012 4:26:57 PM PDT by Bob
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To: BfloGuy
But when I actually counted the jobs created in various industries and eliminated those that clearly had nothing to do with lower marginal tax rates, I was left with a much smaller number

"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.

7 posted on 06/09/2012 4:27:08 PM PDT by freedumb2003 ('RETRO' Abortions = performed on 84th trimester individuals who think killing babies is a "right.")
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To: BfloGuy

It’s time to bury the tax and spend, leftwing rag, Market Watch.


8 posted on 06/09/2012 4:27:50 PM PDT by FlingWingFlyer (Free Stuff or Freedom! You Decide 2012.)
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To: BfloGuy

Classic WTF journalism!


9 posted on 06/09/2012 4:28:18 PM PDT by SuperLuminal (Where is another agitator for republicanism like Sam Adams when we need him?)
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To: Toddsterpatriot; Mase; expat_panama

Vomit. Can’t wait until someone at Heritage or AEI takes this man to pieces.


10 posted on 06/09/2012 4:29:02 PM PDT by 1rudeboy
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To: BfloGuy
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.

Hmmm...as I recall, unemployment under Bush fell below 5%, which is considered full employment. This despite the TRILLION dollar hit the economy took because of 911 and its' aftermath.
11 posted on 06/09/2012 4:30:14 PM PDT by rottndog (Be Prepared....for what's coming AFTER America...)
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To: Ramcat

That’s the plan.


12 posted on 06/09/2012 4:30:24 PM PDT by 2ndDivisionVet (Ich habe keinen Konig aber Gott)
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To: BfloGuy
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.

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!

D'UH!!

13 posted on 06/09/2012 4:33:06 PM PDT by publius911 (Formerly Publius 6961, formerly jennsdad)
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To: Bob
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? :=)

In fact, you can track the burst of the dot-com bubble almost to the day Janet Reno filed suit against Microsoft.
14 posted on 06/09/2012 4:33:19 PM PDT by rottndog (Be Prepared....for what's coming AFTER America...)
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To: BfloGuy

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.


15 posted on 06/09/2012 4:39:00 PM PDT by Huskrrrr ( the will)
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To: BfloGuy
Reagans “Tax Simplification Act” in 1986 was the biggest tax increase in our history!!!

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.

16 posted on 06/09/2012 4:40:01 PM PDT by dalereed
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To: oldbrowser

Capital gains rates were cut which leads to supply side prosperity.


17 posted on 06/09/2012 4:42:10 PM PDT by freedomrings69
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To: BfloGuy
The number of people employed at any particular time depends on the relationship between the demand for labor vs the level of average money wage rates, not on the marginal tax rates. The formula is: average money wage rates = demand for labor/supply of labor. More jobs are created when wage rates are not too high compared to the demand for labor.

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.

18 posted on 06/09/2012 4:45:44 PM PDT by mjp ((pro-{God, reality, reason, egoism, individualism, natural rights, limited government, capitalism}))
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To: BfloGuy

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.


19 posted on 06/09/2012 4:48:07 PM PDT by mrsmith (Dumb sluts: Lifeblood of the Media, Backbone of the Democrat Party!)
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To: mjp
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.

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.

20 posted on 06/09/2012 4:51:26 PM PDT by BfloGuy (The final outcome of the credit expansion is general impoverishment.)
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