Supply-Side Economics, R.I.P.

[Startraveler]

There's an interesting blog post up today from Bruce Bartlett, a former staffer for Ron Paul and Jack Kemp in the '70s (as he explains in this post, he helped to draft the Kemp-Roth tax bill, which was later adopted by Reagan and became his famous 1981 tax cut), as well as an official in both the Reagan and Bush I administrations. In short, he's one of the original supply-siders. The whole thing is worth a read but here's a nice part where he points out what most people should already know: tax cuts are not a panacea:

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."

He also has something interesting things to say about the current situation:

Many of my friends believe I have abandoned supply side economics and become a Keynesian. (Among conservatives there are few insults more damning than to be labeled a "Keynesian.") But as I try to explain in my book, my views haven't changed at all; it's circumstances that have changed. I believe that my friends are still stuck in the 1970s when tax rates were considerably higher and excessive demand (i.e., inflation) was our biggest economic problem. Today, tax rates are much lower and a lack of demand (i.e., deflation) is the central problem. I really don't understand why conservatives insist on a one-size-fits-all economic policy consisting of more and bigger tax cuts no matter what the economic circumstances are; it's simply become dogma totally disconnected from reality.

Nor do I understand the conservative antipathy for Keynes, who was in fact deeply conservative. He developed his theories primarily for the purpose of saving capitalism from some form of socialism. Same goes for Franklin D. Roosevelt, whose biggest economic mistake, I believe, was not that he ran big budget deficits, as all conservatives believe, but that he didn't run deficits nearly large enough until the war forced his hand.

Like I said, it's an interesting read and here's the link again: Supply-Side Economics, R.I.P..

[THE MATRIX]

The only reason Conservatives continue to press on about Supply-Side Economics even though it was deemed a failure time and time again is so that they can continue to Pillage the average taxpayers for their own personal gain. Why else would there we be in such economic condition today. The rich are getting richer, Government bailouts perpetuated by both Wallstreet and Congress to screw the taxpayers, and rewarding failure with taxpayer's money.

Edited October 14, 2009 by wolfram&hart12345

[questionmark]

It is not the Supply -Side Economics that failed here, but the unwillingness to apply it in full extend. The only parts that have ever been applied is those that could get politicians reelected and their Wall-Street souffleurs (perceived) rich. The hard part was well kept in the drawer.

[Caesar]

Wouldn't you call the takeover of GM a form of Supply-Side Economics?

[Lt_Ripley]

The only reason Conservatives continue to press on about Supply-Side Economics even though it was deemed a failure time and time again is so that they can continue to Pillage the average taxpayers for their own personal gain. Why else would there we be in such economic condition today. The rich are getting richer, Government bailouts perpetuated by both Wallstreet and Congress to screw the taxpayers, and rewarding failure with taxpayer's money.

the rich may be getting richer but that can't last forever. when business leaves the US for cheaper labor and costs out of our boarders that means people here aren't working . Compound that .. yet those same companies expect those here in the US to buy those same goods. with what ?? A paycheck cut in half with no benefits ? It's a catch 22. because of such actions goods from China sell more. Who can afford products of the USA ?

and while that flash profit looks good short term . long term ? it's killing the country. But greed never has been able to look long term.

Edited October 15, 2009 by Lt_Ripley

[danielost]

the rich may be getting richer but that can't last forever. when business leaves the US for cheaper labor and costs out of our boarders that means people here aren't working . Compound that .. yet those same companies expect those here in the US to buy those same goods. with what ?? A paycheck cut in half with no benefits ? It's a catch 22. because of such actions goods from China sell more. Who can afford products of the USA ?

and while that flash profit looks good short term . long term ? it's killing the country. But greed never has been able to look long term.

again you fail to see what you yourself posted.

when something cost's to much you look for the samething at a cheaper price. when you find it you buy it even if you have to go out of your way to get it.

i have seen people looking in the grocery adds for cheaper food products. when they find them they will drive all the way across town. not thinking that they are spending as much or more in gas as they are saving.