One of the original supply-siders, Bruce Bartlett, explains in a brilliant op-ed why the ideas that worked so well in the early 1980’s are irrelevant today. Bartlett is promoting a new book, The New American Economy.
I continue to believe that what the supply-siders did was good for the economy, good for the country and good for the advancement of economic science. The best economists in the country were pretty clueless about our economic problems during the Carter years. It was widely asserted that the money supply had no meaningful effect on inflation, that marginal tax rates had no incentive effects, and that it would take decades or another Great Depression to break the back of inflation.
As all economists now know, these ideas were wrong. All economists today accept the importance of the money supply–perhaps too much; during the recent crisis many asserted that fiscal stimulus was unnecessary because an increase in the money supply was the only thing necessary to restore growth. (How this would have been accomplished when interest rates were close to zero was never explained.) All economists now accept the importance of marginal tax rates to economic decisionmaking, and organizations like the National Bureau of Economic Research publish vast numbers of papers on this topic.
During the George W. Bush years, however, I think SSE became distorted into something that is, frankly, nuts–the ideas that there is no economic problem that cannot be cured with more and bigger tax cuts, that all tax cuts are equally beneficial, and that all tax cuts raise revenue.
These incorrect ideas led to the enactment of many tax cuts that had no meaningful effect on economic performance. Many were just give-aways to favored Republican constituencies, little different, substantively, from government spending. What, after all, is the difference between a direct spending program and a refundable tax credit? Nothing, really, except that Republicans oppose the first because it represents Big Government while they support the latter because it is a “tax cut.”
Bartlett exposes the caricature that has taken over conservative economic thinking, the slavish devotion to dogma that makes it impossible to consider the circumstances of our new reality. Think about it. Talk to a conservative about economic policy, and the answer, regardless of the circumstances, is usually the same – spending bad, tax cuts good. I can teach a three-year-old to repeat that.
Bartlett goes on to explain why massive spending was necessary with the economic collapse we faced last year, and the obscenely stupid response of many conservatives who suggested addressing the problem with more tax cuts.
Bartlett was an adviser to Jack Kemp and helped write the Reagan tax cuts. This is a must-read for anyone who wants to understand the history of supply-side economics and why one of its chief architects is arguing that it doesn’t apply today.
Peter Schiff has been calling the mortgage crisis and the recession for years. This video shows Schiff battling the likes of Art Laffer and Ben Stein, who were arguing last year that the US economy was in great shape and that there was no problem with inflated home values or the sub-prime mess.
Laffer is the same guy saying the sky will fall if Obama institutes his tax plan. Why should we listen to this guy?
For years we were told that tax cuts would solve everything. Of course, we were just living it up on cheap money, and now the bill is coming due. Watch the video, and ask yourself who you should be listening to now.
If you’re making under $250,000 per year, both candidates are proposing tax cuts. For the lower brackets, the cuts are bigger under Obama’s plan. McCain offers higher cuts for taxpayers in the higher brackets.
I was expecting a little more from Meg Whitman’s speech. As the former CEO of Ebay, she might a bright future ahead of her in politics. The pundits on MSNBC were speculating that Arnold supports the idea of having Whitman be the next governor of California.
Her delivery was fine, and she was able to convey the Republican message of individualism and tax cuts, but the crowd wasn’t into it. She got some good cheers, but overall the speech was dull.
Isn’t it time that the government stops telling us what we can do for entertainment? The GOP congress slipped in a law regulating online poker in 2006. Poker players and others who believe in basic freedoms and liberty are trying to overturn that law and ensure that this game of skill can be played without governmental interference (other than sensible oversight, taxes and regulation).
If a nutty tax-protestor tries to tell you that the tax codes are not enforceable by the federal courts, just point them to the sorry tale of Wesley Snipes. What a moron.
Barack Obama talks about the economy and taxes with Maria Bartiromo. His proposals make sense. Some taxes will go back to the rates during the Clinton years, while many middle class Americans will get a tax cut. When asked about some of the tax increases, Obama has a great response:
Why raise taxes in a slowdown? Isn’t that going to put a further strain on people?
There’s no doubt that anything I do is going to be premised on what the economic situation is when I take office next January. The thing you can be assured of is that I’m not going to make these decisions based on ideology. I’m not a dogmatist. My opponents to the right would like to paint me as this wild-eyed liberal, but I believe in the market. I believe in entrepreneurship. I believe in capitalism, and I want to do what works. One of the problems with the Bush Administration has been its rigidness when it comes to economic policy. It doesn’t matter what the problem is, they’ll say tax cuts. Trade deficit? Tax cuts. Slowdown in manufacturing? Tax cuts. At a certain point, if you’ve only got one arrow in the quiver, you’re going to have problems.
With his surge in the polls, Mike Huckabee is scaring the hell out of economic conservatives and foreign policy conservatives. James Taranto isn’t impressed with Huckabee’s Fair Tax proposal.
The GOP has tried for years to repeal the Estate Tax, and Democrats have naturally resisted. Finally, the GOP leadership has decided to move forward with a very fair compromise.
Under the House’s compromise, which probably will come to a vote tomorrow, estates worth as much as $5 million — $10 million for couples — would be exempt from taxation indefinitely.
The tax rate on estates worth more than the exemption level up to $25 million would be set at the same tax rates that apply to capital gains — now 15 percent but scheduled to rise to 20 percent in 2011. The rate for estates worth more than $25 million would be twice the capital gains rate. The bipartisan Joint Committee on Taxation estimated the estate tax cut would cost the government $279 billion over 10 years.
Democrats should support this compromise. The current Estate Tax rates are too high, thus forcing many business owners to spend way too much time and moneytrying to avoid the tax. The new rates are fair, so let’s get it done.
