Tax and revenue: Who's reality-based?

The Washington Times touts the phony claims of the supply-siders about the latest budget figures:

This week's lower deficit figure has been a shot in the arm for tax cutters in Congress and has reignited the debate over supply-side economics and whether President Bush's 2001 and 2003 tax cuts helped or hurt the federal budget.

"Supply-side economics are alive and well," said Rep. Jeb Hensarling, Texas Republican and the budget point man for House conservatives, who added that tax cuts are the only explanation for the declining deficit. "Spending's not down; spending has increased every single budget. What happened is we're awash in tax revenue because supply-side economics is alive and well."

There's just no serious debate about this within the reality-based community. Today's New York Times includes a graphic that illustrates the point perfectly:

Here's the key portion of the accompanying article:

At first blush, the recent jump in tax revenue would seem to validate Mr. Bush and those who believe that tax cuts ultimately generate higher tax revenues because they prompt people to work harder, invest more and take more entrepreneurial risk.

The White House, in a news release last week, boasted that tax revenues have climbed 34 percent since Congress passed Mr. Bush’s second big tax cut — which included a major reduction in taxes on stock dividends and capital gains.

But revenues are only up in comparison with how low they had plunged in recent years. Individual income taxes, the biggest component of federal revenue, are barely back to the level that was reached in 2000, $1 trillion. Adjusting for inflation, income tax revenue is still lower than six years ago.

Comments

[Kit Burns]

I saw this in the Times this morning. What is missing from the chart is information on critical programs that help the poor, the needy, provide education, and healthcare. It doesn't tell the story of the discrepancy between the poor and the wealthy. It will take time for the damage that Bush and his friends have done to the US (that would be all of us!)

[Jon Henke]

TCS Daily had a good recent column on this topic. The gist is that the CBOs 2001 predictions weren't actually far off. The change has not been in the economy, but in the spending and revenue factors. Which would seem to support your point.