In yesterday's New York Times, Jon Chait got out his crystal ball:
Remember the Republican presidential debate a few months ago, when three candidates raised their hands to indicate they didn’t believe in evolution? Something just as laughable is likely to happen today, at the first Republican debate on the economy. Every candidate will probably embrace the myth that cutting taxes increases government revenues. At the very least, no one will denounce it as a falsehood.
As predicted, two candidates stepped up to the plate:
SEN. BROWNBACK: I've put forward a proposal of an optional flat tax, and putting that on the table, saying, okay, you can pick this. If you want to stay in the code, go ahead, God bless you, but here's an optional flat tax. Sixteen countries around the world have gone to the flat tax. Nobody's gone back away from it, because it creates growth, it creates growth in the economy, and it increases revenue for the government...
GIULIANI: I cut taxes 23 times when I was mayor of New York City. I believe in tax cuts. I believe in being a supply-sider. I cut the income tax -- I think it was 24 percent. We got 42 percent more revenues.
I see in The Wall Street Journal this morning an editorial that says: Can we take the good news that the tax cuts have actually worked to produce about $500 billion in additional revenue no one ever thought was possible?
Giuliani (here and here), Mitt Romney, Fred Thompson, and John McCain have previously made similar claims during the campaign in an effort to win over economic conservatives. Any chance a reporter or debate moderator might ask the candidates why they're endorsing a theory that even Bush administration economists reject? Anyone?
Have you even examined Senator Brownback's optional flat tax? Because it's a really great idea whose time has come.
Although I do admit that Romney and Giuliani's dueling tax cut claims are really suspect and hardly believable....
Posted by: Psycheout | October 10, 2007 at 01:54 PM
No chance b/c reporters also know the Bush administration is a bunch of knuckleheads. If the Bush people don't believe that tax cuts could generate more revenue, then you'd better take the opposing view.
Posted by: David B. | October 10, 2007 at 10:44 PM
But tax cuts did generate more revenue, which is why the economy grew an unprecedented amount right after a near-recession and a major terrorist attack, and why the deficit has continued to be paid down, I think by half at this point.
I don't see how you can reject something that's happening in front of your very eyes.
Posted by: Yehudit | October 10, 2007 at 11:00 PM
The US deficit has increased from $5.93 trillion dollars at the start of January 2002 to $9.05 trillion dollars as of today.
These figures are from the US Treasury.
It has increased in each of the past five years and it has increased again this year.
That's an increase of 52 %, or about 8% per year.
Posted by: Howard | October 11, 2007 at 12:05 AM
Howard, that's the debt, not the deficit. The debt is the total amount owed by the Government, the deficit is the amount by which the debt increases in a given fiscal year. The debt has continued to increase, because there has been a deficit each year. But the amount of the deficit has been trending down.
Posted by: Rob | October 11, 2007 at 01:39 PM
Oh, I know that Rob. But Yehudit had said the deficit was being "paid down", implying that we were achieving a reduction in the total debt (ie. running a surplus).
I see that the total debt increased by $3,100 billion dollars. Does Yehudit believe it would be higher without the benefit of tax cuts ? I guess he does but he doesn't explain how...
I do not see that "tax cuts have generated more revenue" nor that there was a significant (off-setting) economic stimulus as a result of changes in the tax laws.
To put it simply, levels of economic activity have far more to do with total tax revenue than tax rates have to do with levels of economic activity.
Posted by: Howard | October 12, 2007 at 09:42 PM