Supply-side nonsense from Jerry Bowyer

Time to pick up more intellectual garbage from Jerry Bowyer, a National Review Online financial "expert" who can't reason his way out of a paper bag (see here, here, and here).

In his latest effort, Bowyer once again claims that the Laffer curve has been vindicated and that tax cuts increase revenue, a claim that even Bush economists disavow:

Last week, the Laffer curve, a much maligned though powerful predictive tool, got another notch in its belt: Tax revenues hit the highest one-day point in U.S. history.

Of course, there's a bit more to the story. President Bush cut tax rates in 2003, and tax revenues have been climbing ever since — a trajectory the Laffer curve predicts when tax rates are made less prohibitive. The process may seem counterintuitive, yes. But anybody who bet against it lost out.

Note what's missing from Bowyer's account: the 2001 tax cut. Like the Treasury Department and the Wall Street Journal, Bowyer is cheating by focusing only on the period after the second Bush tax cut. That's the great thing about cutting taxes repeatedly: when the economy picks up, you just point to the most recent tax cut and take credit.

More fundamentally, if tax cuts increased revenue, why is per capita revenue growth near zero since 2001 after adjusting for inflation? Bowyer's cherry-picked data tell us nothing.

Update 5/23 2:43 PM: In a comment on this post, Bowyer writes the following:

[Y]our article above fails utterly to deal with my arguments. I have, repeatedly explained why I start the evaluation of the President's economic policies in 2003. You ignore those reasons. In fact, you leave out that the fact than I was writing articles in 2001 in which I predicted (correctly) slow growth.

I'll try once more. Tax cuts which leave out the wealthy have very little ability to stimulate the economy, because, well, the wealthy have more money. The 2001 cuts, almost completely deferred the high income bracket cuts. This omission is a pitiful oversight in your article.

I'll defer to Bowyer on what he wrote in 2001 -- I don't read him that closely -- but it's ultimately irrelevant if he believed the 2001 tax cut would not work. By starting the timer in 2003, he's stacking the deck in favor of his simplistic Laffer-style argument. And the size of one-day revenue collections is a useless measure of overall tax revenue.

Comments

[Jerry Bowyer]

Brendan, you tried to pawn yourself off to my producer as a down the middle fair minded analyst, when you wanted to be a guest on my radio show, but you've shown yourself a leftie hack.

For instance, your article above fails utterly to deal with my arguments. I have, repeatedly explained why I start the evaluation of the President's economic policies in 2003. You ignore those reasons. In fact, you leave out that the fact than I was writing articles in 2001 in which I predicted (correctly) slow growth.

I'll try once more. Tax cuts which leave out the wealthy have very little ability to stimulate the economy, because, well, the wealthy have more money. The 2001 cuts, almost completely deferred the high income bracket cuts. This ommission is a pitiful oversight in your article. I'm ashamed that I ever recomended your site to my listeners.