Interesting Op-Ed by Jonathan Chait in today’s NYT: Captives of the Supply Side. Chait makes the interesting argument that as far as the GOP is concerned, it is not the religious right, but the economic far right that calls the shots:

"Last year, Senator John McCain earned widespread ridicule for
publicly embracing Jerry Falwell, whom he had once described as “evil.”
But an equally breathtaking turnabout occurred earlier in the year,
when Mr. McCain embraced the Bush tax cuts he had once denounced as an
unaffordable giveaway to the rich. In an interview with National
Review, Mr. McCain justified his reversal by saying, “Tax cuts,
starting with Kennedy, as we all know, increase revenues.” It was the
political equivalent of Galileo conceding that the Sun does indeed
revolve around the Earth."

That’s a pretty fair assessment of the Supply Side camp in the Republican party.  Enthralling my pal Larry, they dominate the economic debate to the point where there is no debate:

"Mr. McCain is not alone. Every major Republican contender — Rudy
Giuliani, Fred Thompson, Mitt Romney — has said that the Bush tax cuts
have caused government revenues to rise. No prominent Republican
office-seeker dare challenge this dogma for fear of offending the
economic far right.

Yet there is no more debate about this question among economists
than there is debate about the existence of evolution among biologists.
Most economists believe that it is theoretically possible for tax rates
to be high enough that a reduction in rates could actually produce more
revenues. But I do not know of any tenured economist in the United
States who believes this is true of the Bush tax cut
s.

Granted, economic growth sometimes causes revenues to rise faster
than expected after a tax cut, as has happened since the 2003 tax cut.
But sometimes revenues fall faster than expected after a tax cut, as
they did after the 2001 tax cut. And sometimes revenues rise faster
than expected after a tax increase, as they did after the 1993 Clinton
tax increase.

Even very conservative economists who have worked for the Bush
administration — including Greg Mankiw, a former chairman of the
Council of Economic Advisers under President Bush who is now an adviser
to Mr. Romney — have publicly stated that today’s tax revenues would be
even higher were it not for the Bush tax cuts
."  (emphasis added)

That’s a fascinating observation. Apparently, this belief is heresy:

"No Republican candidate can risk committing heresy by acknowledging
this bipartisan consensus among economists. On social issues, however,
Republicans actually tolerate diversity of thought. For example, Mr.
McCain, Mr. Giuliani and Mr. Thompson all oppose, on federalist
grounds, a constitutional amendment to ban gay marriage."

Meanwhile, lots of credible economists are quite critical of the Supply Side argument (as well as some amusing goofs) — including Greg Mankiw.

And as we’ve long said here, the main credit for the current expansion
lies with the Fed’s Ultra-low rate cuts, and global growth — not
either the 2001 or 2003 tax cuts.

I am curious: is there a general consensus amongst readers as to whether or not Supply Side is legit or not?

What say ye?

>

Source:
Captives of the Supply Side
Jonathan Chait
NYT, October 9, 2007
http://www.nytimes.com/2007/10/09/opinion/09chait.html

Category: Economy, Politics, Psychology, Taxes and Policy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

154 Responses to “The Economic Far Right & the G.O.P.”

  1. VJ says:

    David,

    Why are more tax revenues a good thing?

    Because massive federal budget deficits are a bad thing.

    Supply-side or whatever, smaller gov’t=better gov’t. You want to balance the budget? Cut taxes AND spending for once, and let’s start with ag subsidies and the Dept of Education. Oh, and the Surgeon General’s office

    Typical pie-in-the-sky thinking. To “Cut taxes” would merely decrease federal income tax revenue further. As to cutting spending, currently, federal government revenues only cover about 68% of expenditures, primarily because of a decline in federal income tax revenue as a result of previous tax cuts. Almost two-thirds of every dollar you pay in federal income taxes goes to pay for just the Military Industrial Complex and the INTEREST on the Reagan/Poppy Bush/Bush Jr federal debt.

    You think you can “balance the budget” by cutting spending ? Please present a detailed list of cuts.

    You can’t get there from here.
    .

  2. SoNotintheKnow says:

    “In the first place, I don’t buy the concept that any reduction in taxes is lost revenue to the government. The taxpayers haven’t lost it, it’s in their pocket.”

    Fred Thompson, CNBC GOP Debate

    reference
    http://www.usnews.com/usnews/politics/bulletin/bulletin_071010.htm

    Seems to make sense to me, but, then again, I am Main Street not Wall Street.

    Y’all help me out with this. Which is it…Keynesian or Supply-side economics that creates capital for Main Street??

  3. RM says:

    Good God! I think it a bit revisionist to suggest that the so-called “Supply-side” school of economics is grounded mostly in a “bring back the gold standard” and “producers are most important” framework, although both policy prescriptions were well known at a time in our history when major economic depressions and panics were commonplace. Then again, I’m pretty sure the economics profession doesn’t even recognize a so-called “supply-side school” of economics anymore than you can find a reputable economist who calls themselves a monetarist. However, you will find the Kemp’s, Murray’s, Wanniski’s and even Kudlow’s of the world and an entire political movement and party that for the last 30 years has prescribed tax cuts as a panacea for every social, economic and political ill that has beset the nation. Now tell me again about the people in favor of the gold standard and a return to excise taxes, etc?

  4. SPECTRE of Deflation says:

    I’ve noticed in a number of the comments that there is still the misconception that tax cuts lead to increased revenues with the Reagan 80′s being pushed as the example. To me that is like George Bush turning a budget surplus into a major budget deficit and then getting credit when over time the deficit shrinks from $450 billing to $200 billion– you’ve effectively lost sight of the fact that he started with a surplus.

    It is no mystery that tax revenues invariably increase over time, tax cut or no tax cut and especially during periods of economic recovery, but the real measure of whether tax cuts increase revenue is whether the government brings in more money than it would have if the tax structure had remained as it was which hasn’t happened in any of the cases cited thus far.

    Posted by: RM | Oct 10, 2007 2:37:43 PM

    The Ronnie tax cuts did exactly as promised. We moved away from the horror of the peanut farmer legacy with his sweater bullshit. Forget about the “over time BS” because this was simply not the case. They worked very quickly, and provided a way out of the Carter debacle. We simply spent more and that continues today. I can’t get a 5% yearly raise and then spend 10% more year after year without getting my head handed to me at some point. Welcome to America.

  5. Northern Observer says:

    Who does a better job deploying money/capital in the economy? The government? Or the market?

    If your answer is the market — and I am sure even some of the non-tenured economists believe — then government should tax as little as possible. We should never concern ourselves about whether the government is getting enough revenue, because it should get as little as possible.

    Simple.

    Posted by: Karl K | Oct 9, 2007 7:45:32 PM

    Y’all help me out with this. Which is it…Keynesian or Supply-side economics that creates capital for Main Street??

    Posted by: SoNotintheKnow | Oct 10, 2007 3:08:43 PM

    The thing is, and this was Chait’s point, when it comes to optimal taxation policy it is not a zero sum game between government and non-government.
    The key being that for certain spending catagories it is more economically efficient to pay for them via taxation and for other spending categories it is better to leave it to private industry.

    Case in point, the restaurant owner. It would be more damn efficient economically if every entrepreneur in America could start or buy a business knowing that the employee medical costs are off the table, covered through taxation for all employees.

    In fact this is the tragedy of the zero sum Republican position – all taxes must be eliminated all the time. It prevents intellegent discussion of how to optimize the taxation system so that it is most favorable to employment creation and capital formation, whithout defunding the government so much that deficits balloon, bridges collapse and schools deteriorate.

    My optimal mix is the Nordic model. Progressive personal and consumption taxes with low corporate taxes and broad welfare coverage. To my mind it’s more optimal that what exist today in America: low personal, no consumption, high corporate tax and low welfare coverage. Frankly the USA’s taxation/ spending model is busted and should be reformed but the no taxation ever people make that impossible; and so the Titantic slowly takes on water while smaller more nimble boats sail by.

  6. Northern Observer says:

    but the real measure of whether tax cuts increase revenue is whether the government brings in more money than it would have if the tax structure had remained as it was which hasn’t happened in any of the cases cited thus far.
    Posted by: RM | Oct 10, 2007 2:37:43 PM

    This is the test that Supply Side fails over and over again. The Kennedy cut can be said to have worked in supply side fashion but after that you are too far down the laffer curve to get anything but a net loss after a reduction. end result – deficit.

    Spector of deflation – You know who fixed stagflation? Volker. Saint Ronnie’s economic team, not so much. At least they had the sense to raise rates when the deficit ballooned. Unlike the current oval office occupant. And go easy on the humble peanut, what the heck did they ever do to you that you gotta defame em?

  7. Eclectic says:

    Brendon,

    Your two linked references:

    First one, I can’t link to. Could you run your link through tinyurl.com and bring it back?

    Your second link contributes much to this discussion.

    Barringo… Wonder why you haven’t taken that letter and posted it entirely?…

    Do it!… and we’ll have a corner to hang our hats on in this worthy debate. Or… f’it!… and ratchet on.

    We’re overdue for an Apple wetdream anyway.

  8. Eclectic says:

    Oh, pardone, por favor!… I didn’t realize we’d already had the obligatory nocturnal i-n-t-r-o-m-i-s-s-i-o-n.

    My bad.

  9. brion says:

    Barry wrote: “I am curious:…”

    That’s rhetorical curiosity i’m assuming.

    Of course “supply side” is nothing more than Republican boilerplate boondoggle & propaganda passed down from their Corporate paymasters in exchange for campaign $$$.

    Nothing more than the fat feeding themselves w. a promise (lie) to the skinny that they can be fat & geedy too.

    Taxes are a hallmark of any civilized society. Ya want a “Libertarians” paradise? Try Somalia.
    They have low taxes as well.

  10. chad says:

    THANK YOU BRIAN B.!

    Incentives matter.

  11. chad says:

    how’s the rule of law in Somalia? oh yeah, need that just a wee bit don’t we.

    lest we all forget who mr. chait is – here’s his “nonbiased” credentials – https://ssl.tnr.com/p/docsub.mhtml?i=20030929&s=chait092903

    again – i don’t know if the laffer curve works, but i do know money is better spent by the people who earn it.

  12. ideogenetic says:

    I don’t think there was any mention of capital controls in the thread. Without capital controls, globalization can’t guarantee that any extra investment will occur in the United States. This means that supply-side economics is bad domestic economic policy. Supply-side economics might increase China’s revenues or India’s, but not the U.S.’s

  13. The Dirty Mac says:

    “Tax rate cuts have never stimulated the American economy, never increased federal income tax revenues, and never created a net increase in the American workforce. Tax rate cuts have repeatedly led to economic slow-downs or recessions, and/or massive federal deficits and debt, and/or declining Standards of Living.”

    You forgot the part about converting all capitalist nations into socialist nations.

  14. fat & geedy Dirty Mac says:

    We know that brion really really hates Libertarians – so much that he/she compares them to those committing genocide. The job of refuting the opposing argument through facts is left to others. It is enlightening to know, however, that only the Republicans are supported by corporations.

  15. fat & geedy Dirty Mac says:

    We know that brion really really hates Libertarians – so much that he/she compares them to those committing genocide. The job of refuting the opposing argument through facts is left to others. It is enlightening to know, however, that only the Republicans are supported by corporations.

  16. fat & geedy Dirty Mac says:

    We know that brion really really hates Libertarians – so much that he/she compares them to those committing genocide. The job of refuting the opposing argument through facts is left to others. It is enlightening to know, however, that only the Republicans are supported by corporations.

  17. fat & geedy Dirty Mac says:

    We know that brion really really hates Libertarians – so much that he/she compares them to those committing genocide. The job of refuting the opposing argument through facts is left to others. It is enlightening to know, however, that only the Republicans are supported by corporations.

  18. fat & geedy Dirty Mac says:

    We know that brion really really hates Libertarians – so much that he/she compares them to those committing genocide. The job of refuting the opposing argument through facts is left to others. It is enlightening to know, however, that only the Republicans are supported by corporations.

  19. apav says:

    Supply side smacks more of soviet centralized planning than of free market. The belief seems to be “If you supply enough of something, the price will become low enough that someone will find marginal utility for it and buy it.” Carried too far, it is basically a call to reduce the risk of investment which results in misallocation of resources since the investor’s downside is reduced, they are not motivated to be careful.

    justin:
    the rich are represented better by Coors, Scaife, Templeton, Olin, Walton, Hilton, DeVos (& Prince of Blackwater fame)[ see: http://www.mediatransparency.org/funders.php

    jag:
    OOOh, quote taxfoundation.org, Now there is an unbiased shill for the rich. The top 1% pay most of the taxes because they get the greater majority of the income. jeesh!

    Brian B.
    It’s great that you were able to be rewarded with an upper middleclass income for working so intensely. And I’d wager you sold those restaurants for a pretty penny. And I sympathize with anyone who has to deal with buracracy, but quit your whining. My household income is similar, & I don’t feel rich either. But I do feel insecure which is how the wealthy like it. Without society (& taxes) your hard work would have been hunting, chopping wood and fighting so that you could live in a hut.

  20. apav says:

    On tax cuts – there really is no such thing unless we are running a genuine surplus. They really are just tax deferrals in the absence of spending cuts (people who push for tax cuts are basically just asking for someone else to pay the tax.)

  21. VJ says:

    The Dirty Mac,

    You forgot the part about converting all capitalist nations into socialist nations.

    You forgot the part about you licking Hitler’s boots.

    (See, I can make an incongruous remark as well !)
    .

  22. brion says:

    you really shouldn’t attempt to put words into other people’s mouths in this thread Fat Geedy Dirty etc….

    you don’t have the wit for it.

  23. wtf says:

    Brian B,

    I understand $250k was gross personal income as you stated and according to your tax figures you walked with approx $100k/yr. Not great in Cali but also not bad either. In your case you decided the hours and headaches were not worth it and I don’t fault your decision. I made a similar decision with a business I had started that imported clothing from S. America. Profitable yes, worth my time no. I totally agree starting a business is difficult. I had finance and accounting degrees and still found running the numbers difficult. I often wondered how anyone could figure it all out.

    But I look back on this as a learning experience and not as an argument in favor of GOP supply side economics. The experiment emphasized to me the importance of a good idea and a good business plan.

    The restaurant business is notoriously difficult. Did no one tell you this? Did California really need another Pizza business? Should California have lower tax revenue just so you could make more money and in turn provide low paying, part time, service industry jobs to Californians with no health-care, no retirement plan, etc? There is a cost to society incurred in letting you run your pizza business and you pay this cost through taxes, liquor licenses, health & safety requirements, etc. At the end of the day, it wasn’t worth it. But do I as as a fellow taxpayer want to lower tax revenue that goes to pay for roads, public education, health & fire inspectors, social safety nets, etc., so that more Pizza entrepreneurs can make more money providing low pay, service industry jobs? No.

    Do I applaud your hard work? Yes. But repeating the mantra of lower taxes and blindly supporting GOP policies that do nothing for you, for real business opportunities, and for the rest of us is extremely short sighted.

  24. Eclectic says:

    VJ,

    What would you suggest as an appropriate marginal income tax rate for a range of incomes?…. Lowest marginal rate?… Highest?

  25. brion says:

    wtf-saved the best for last….
    Best post in thread award

    Winston Munn wasn’t bad either (as usual)…..

  26. Brendon says:

    Electic – here you go:

    http://www.tiny.cc/zqPmb

  27. VJ says:

    Eclectic,

    First, in regards to your earlier post referencing economic incentives, the American RightWing contends that high marginal tax rates on the wealthy are a disincentive to investment, whereas low tax rates spur investment and thereby increase economic growth. I’d say the data supports the exact opposite. That when tax rates on the wealthy are low, most are content to lazily collect relatively safe returns from stocks, bonds, and other normal investments. However, when tax rates on the wealthy are high, in order to retain their accustomed level of income, they have to seek out higher rates of return with riskier and less standard areas of investment, resulting in some losers but also some very big winners, and this is the real engine of economic growth and breakthrough advancements.

    As to taxation, it depends on the mix of taxes.

    The first thing I would fix is FICA. Lift the cap, apply it to all income, and lower the rate down to the low single digits. It would eliminate the regressiveness, and bring in lots more revenue for those who claim the trust fund is going broke (which it isn’t).

    The second thing I would fix is the Capital Gains tax. We only have an Estate Tax because of the Capital Gains death exemption. It’s the birth canal of dynasties. Most other nations don’t have an Estate Tax because they don’t have a death exemption on Capital Gains. Additionally, capital gains should be taxed at the same level as ordinary income. There is no data to support the claim that lower rates spur investment, and they merely (once again) heavily benefit the wealthy. Or, one could eliminate both the Capital Gains tax and the Estate Tax and replace it with a Wealth Tax, which would be more difficult to game.

    Then you could get around to progressive income tax rates. If the rates were relatively flat, you could have many multiple rates in small increments to avoid the angst of bracket bumping, and it could still be filled out on one side of a half a sheet of paper.
    .

  28. Eclectic says:

    VJ,

    You didn’t say anything about rates. That was my question. Numbers.

  29. Barry M says:

    No one ever wants to be pinned down on exact numbers and everyone knows they don’t know what the ideal number is but it is helpful to think about our ultimate goal.

    Is it right try to raise as much money as possible for the government?

    It is obvious that we are going to make a mistake one way or another either the rate will be to high or to low which is preferred?

  30. Ken Tomko says:

    Good stuff –

    you should post this as a comment

    On Oct 10, 2007, at 6:53 PM, kentomko@kentomko.com wrote:

    Hello there, I would like to weigh in on the supply side economics argument. I don’t believe that the question can be answered with a general answer for all economies. It basically comes down to who will make the most productive use of the funds. If we have a hypothetical economy with a GDP of $1,000,000 and a tax rate of 30% that gives us revenues of $300,000. Now we propose that the tax rate be cut to 25% reducing our take by $50,000. With our new tax rate, we need to see this $50,000 turn into $200,000 of new output to break even on the cut. I believe that is a very possible return on investment in the real world if these funds are used to create a business, and we account for the spending effects of new employees etc. We are all aware that the government will most likely turn the $50,000 into $15,000 (I’m being kind here.) The problem comes when the funds are shoved under a mattress, or we cut spending ad-infinitum to make more revenues. I won’t be starting a new business if I have to protect my home from fire and theft because we have completely eliminated public services. I agree with the supply side theorists until we are cutting necessary public goods, but feel we could do better by writing tax policy that will increase the productivity multiplier, rather than just handing it out.

    Thanks, and I love the blog…..

    Ken Tomko

  31. Clarke says:

    All I see here are the broken pieces of post modernism. Like the fellow who argues that pizza restaurant has costs….in roads and such. No, the real cost is if there’s no pizza restaurant.

    As far as it being revisionist to suggest that supply side economics is founded around stable money and using the producer as the fundamental unit of economic analysis, that’s just cynical.

  32. brion says:

    ideogenetic wrote: “Supply-side economics might increase China’s revenues or India’s, but not the U.S.’s”

    ya mean like this?

    http://itulip.com/dollardown1currentaccount.htm

  33. Brian B. says:

    WTF,

    thanks for your relpy. Remember did I ever mention anywhere that I thought lower taxes was the answer? That might be my implications but my original questions are still there, how much is fair? Is it fair to tax an owner 60%? I don’t know, but for me the answer was no. After all was said and done $100K yr for all the hours and headaches wasn’t worth it. Yes, I knew the pizza business was tough in California, and many went out of business while mine did flourish, so I must have been doing something correct. Now, I tend to differ with you a bit, who or what says all jobs need to be high paying, health care, benefit jobs? My employyes (which I did appreciate and did reward in other ways)needed only basic skills to make and deliver pizza. Basic skills, basic pay. The profit margin in restaurants in very small, so to add in health care, and other benefits would wipe out most small restaurants. In a perfect world that would be great have these benefits, but then I would need to raise my prices, and somewhere in there I have a feeling my customers wouldn’t appreciate that, even if I explained to them it was because I had a great employee package. Once again I am not writing these posts from the sidelines, I was in the game and there needs to be some type of reward for people that take that chance of time, money, energy. thanks

  34. VJ says:

    Eclectic,

    You didn’t say anything about rates. That was my question. Numbers.

    As I posted, it depends on the mix of other taxes and contributions. Would FICA be fixed so it’s less regressive ? Is there a Wealth Tax, or are capital gains taxed at the same rate as ordinary income ?

    It’s like squeezing one end of a water balloon.
    .

  35. The Dirty Mac says:

    VJ: My comment was indeed uncalled for. Going back to the original quote, you say “never” a bunch of times. “Never” is very strong. Also, it does logically follow that if all tax cuts are bad, then some form of very highly redistributive system is preferred. Correct me if I’m wrong. As far as Hitler goes, he’s not much different than the communists except for the branding.

    With respect to brion, witless or not my comment is right on the mark.

  36. Eclectic says:

    VJ, per you:

    “Then why were the two greatest periods of economic prosperity in the past more than one hundred years when federal income tax rates were at their highest?” end quote.

    What were those two periods… and what were the specific rates you reference?

    I’ve seen your numerous comments about your knowledge of historical tax rates. I assume you can detail the approximate marginal tax rates effective during those periods.

  37. AndrewBW says:

    “How Supply Side Trickled Down”

    See Bruce Bartlett at http://www.nytimes.com/2007/04/06/opinion/06bartlett.html?_r=1&oref=slogin

  38. wtf says:

    Brian B,

    I got your reply. Thanks for fun and thoughtful dialogue. Its appreciated.

    I don’t know the answer either as to how much is ‘just right’.

    I really liked the question posed just before your last comment by Barry M.

    I think it really nails down the different approaches we all have that leave us with different opinions.

    One side looks at taxes as something that is being taken away from them personally. The other side looks at taxes as something that allows us to achieve shared goals as a society.

    We will probably never ever agree on ‘how much’ when approaching the topic like this.

    Maybe the best approach, as he suggested, is to first focus on the ultimate goals. What do we want to see our society look like…someday, maybe not today? Healthcare, education, infrastructure, military, employment, etc.

    If we can at least get consensus on certain shared goals regardless of cost, figuring out how best to achieve those goals over time ‘might’ be a little easier. I guarantee the answer is not a simple ‘more taxes’ or ‘less taxes’.

    Have a good weekend…I’m done! :)

  39. Brian B. says:

    WTF,

    great post!! I am done too..

  40. Eclectic says:

    Well, I ain’t done… They’ll have to peel my cold dead fingers off of this topic. Ha.

    Thanks Brendon…

    But that tinyurl link is to Mankiw’s work that theorizes according to a model. That was Keynes’ problem in his “General Theory.” He could’ve modeled he was his own grandfather by the time he got finished, and he overlooked much of the abstract psychological basis of money, as I’ve explained on this blog with my own theoretical work.

    Back to the practical:

    The letter from CBO was much more practical and I thought it presented an objective discourse leading to a realization that the tax cuts early this decade, from initial estimates and follow-ups, haven’t paid for themselves yet, and likely won’t. To the letter’s credit it doesn’t make the claim that they can’t or won’t, because CBO doesn’t have all the necessary data yet, and it allows for the likelihood that tax revenue losses were partially recovered.

    President Bush today discussed data that he interpreted to indicate that Supply Side economics is reducing the budget deficit:

    http://www.whitehouse.gov/

    As the letter from CBO on the matter of Supply Side revenue recovery states, other economic developments, unrelated to earlier tax reduction legislation attributed to Supply Side overtures, may have resulted in the deficit reduction. For example, the tax revenues from the housing boom that have derived from mortgage securitization and the worldwide economic boom, that likely have little to do with Bush’s Supply Side intentions from 2001 and 2003.

    This business in the letter about potential partial repayment taking place doesn’t pay the bulldog. If tax cuts don’t fully repay the initially lost tax revenue, then that core element of the Supply Side argument doesn’t hold.

    As I’ve claimed, unless marginal tax rates are astoundingly high on average market participants, cutting their taxes, while temporarily stimulative to the economy, won’t subsequently recover the lost tax revenue. It’s because the assumed productivity gained is merely a phantom.

    VJ,

    While I generally agree with you on much of what you responded with, it’s a matter of levels. My focus is on the reasonableness and fairness of a tax code that, in conjunction with fiscal responsibility in government, would work to solve the inequities that I perceive, although I haven’t cornered the market on perception.

    When you say that conservatives claim that disincentives to investment occur with high marginal tax rates, do you mean they’re saying when rates go from such as 25% to 30% and higher… or from 45% to 50% and higher… or from 75% to 80% and higher?

    I’d earlier posted that Supply Side was simply the functional application of phantom economic stimulus (phantom in the sense of the letter later referenced by Brendon above) and that it was in reality disguised Keynesian fiscal policy. I’d also said the stimulus was “to government spending” but I didn’t mean just to government, but I couldn’t edit my post.

    No, Supply Side DOES stimulate the general economy. I just doubt, as the letter doubts, that it does so to the extent of subsequently producing a net positive to tax revenue. I think you and I probably agree about that, although I have not the slightest doubt that it would be net positive to tax revenues as marginal tax rates would approach some excessively high level that would clearly be a disincentive to investment.

    But even that marginal level would vary widely and exponentially and do so more-or-less in proportion to income. What do I mean?… Well, I don’t think 50-60-70% marginal income tax rates are truly disincentives to billionaires, and I think that after a certain amount of wealth and income are achieved that the possessor of these amounts is really mostly just riding herd on the efforts of others. In other words, Bill Gates can not possibly possess $50 billion… he merely is its custodian, owing it and society a degree of stewardship.

    Where in the establishment of wealth does this crossover to public stewardship happen?… I don’t know, but it doesn’t happen with Brian B. in his restaurant at 250k gross, but it most certainly happens w-a-y before someone has accumulated $100 million, and Bill Gates has over 500 $100 millions.

    But I don’t feel punitive about taxes, or wealth, income or success, even spectacular success. I don’t impart to the discussion a concept of “laziness” of wealth as you do. Keynes would’ve supported a wealth tax but I never could. I agree with you about estate taxes, and so does Bill Gates Sr. (I think Bill Gates Jr. too) and Warren Buffett, but I don’t know if they’d have agreed w-h-i-l-e they were making it. That might’ve been a horse of a different color.

    Buffett long ago relegated his wealth building to gamesmanship. That’s all it is for him… a game… a little snorty chuckle with Liz about all the tin cans full of money he’s got buried in his backyard, from the first coins he made when he was in diapers… because he was in diapers when the money lust infected him. A body has to be infected with money lust to get to $40 billion. Most people with common sense would quit the game long before achieving that much wealth.

    Maybe… maybe it’s just the result of a sort of short-circuit in the brain, either occurring in pre-natal development or caused by environmental stimuli. One day they might etch on his tombstone the image of a cold dead hand reaching up from the grave o-n-e last time to place o-n-e last hotel on Park Place. I don’t mean to criticize Buffett because I admire him in many ways. He himself might find the symbolism amusing. No, I’m not opposed to those that accumulate even extreme wealth. Again, it’s all in how they provide stewardship of that wealth that matters to me.

  41. VJ says:

    The Dirty Mac,

    Going back to the original quote, you say ‘never’ a bunch of times. ‘Never’ is very strong.

    It accurately depicts reality.

    Also, it does logically follow that if all tax cuts are bad….

    Never made such a claim. “Tax cuts” can and do have their place. The reference was to tax RATE cuts (which by default heavily favor the wealthy), as purported by the American RightWing as per so-called ‘Supply-Side’ propaganda.

    then some form of very highly redistributive system is preferred.

    Don’t know where you would get such an idea. I would prefer re-redistributive. We had a redistribution of wealth and income, from the Middle-class and Working Poor UP to the wealthy and corporate in the early ’80s and again starting in 2001 (with some reversal during the middle ’90s).

    As far as Hitler goes, he’s not much different than the communists except for the branding.

    Hardly, as the fascist Nazis were RightWingers, while Communists are LeftWingers. I assume you meant to reference Totalitarianism.

    With respect to brion, witless or not my comment is right on the mark.

    Except that nothing posted had even the remotest connection to “Socialism“. Perhaps you need to check your definitions.
    .

  42. VJ says:

    Eclectic,

    What were those two periods… and what were the specific rates you reference?

    The early 1960s under President Kennedy, and the later 1990s under President Clinton. If memory serves, it was an existing 91% top rate and an increase to 39.6%, respectively.

    President Bush today discussed data that he interpreted to indicate that Supply Side economics is reducing the budget deficit

    A) The actual federal budget deficits are multiples of what this administrations states, as they use the Social Security, Medicare, and other trust funds to mask the size of the deficits, and massive amounts spent on Iraq, Afghanistan, and Homeland Security are all off-budget.

    B) According to Douglas Holtz-Eakin, who was the director of the Congressional Budget Office, deficits declined SLIGHTLY because of an increase in corporate tax receipts which only occurred because “a temporary tax break… expired“.

    Once again, when taxes are increased, tax revenue increases.

    When you say that conservatives claim that disincentives to investment occur with high marginal tax rates, do you mean they’re saying when rates go from such as 25% to 30% and higher… or from 45% to 50% and higher… or from 75% to 80% and higher?

    From what I’ve heard and read, they consider almost any level too high, and always advocate lower rates.

    Supply Side DOES stimulate the general economy.

    But it’s never happened. GDP has declined every time. Three strikes and yer out.
    .

  43. The Dirty Mac says:

    “Hardly, as the fascist Nazis were RightWingers, while Communists are LeftWingers.”

    I don’t recall ever reading about the Hitler tax cuts or deregulation of industry. But lets go to the source:

    “There is more that binds us to Bolshevism than separates us from it. There is, above all, genuine, revolutionary feeling, which is alive everywhere in Russia except where there are Jewish Marxists. I have always made allowance for this circumstance, and given orders that former Communists are to be admitted to the party at once. The petit bourgeois Social-Democrat and the trade-union boss will never make a National Socialist, but the Communists always will.”

  44. The Dirty Mac says:

    “The early 1960s under President Kennedy, and the later 1990s under President Clinton. If memory serves, it was an existing 91% top rate and an increase to 39.6%, respectively.”

    39.6% would not qualify as “highest” as the top rate was lower IIRC than the entire post-war era except for the period 1986-1992. Early Reagan the top rate was still around 50% and Kemp-Roth was phased in over three years.

  45. Eclectic says:

    VJ,

    “The early 1960s under President Kennedy, and the later 1990s under President Clinton. If memory serves, it was an existing 91% top rate and an increase to 39.6%, respectively.” end quote.

    I guess that’s why Kennedy’s tax cut has gone down in urban legend, because the high taxes you mentioned were so effective in stimulating the economy and keeping it stim’ed. That one was on your tribe’s tab…

    The late 90s came from a massive tech boom that was more responsible for the economy, then, than is another member of your tribe, while that chief was staying out of Greenspan’s accommodatin’ ways. Agreed… taxes were high then too. I’ll give you that much, but those aren’t two strikes… at best, 1 and 1.

    And more: “But it’s never happened. GDP has declined every time. Three strikes and yer out.” end quote.

    Well, CBO disagrees with you, at least in part, and they’re no advocate that I can see for Sup-Side… and tax cuts (as opposed to Hoover’s tax increases in the kind and gentle 1930s) are quite likely to be accompanied with declines in GDP, because that’s what the whole happy enterprise is all about at those times, whether effective or not. Ball – high – and outside… count goes to 1:2.

    I think as an umpire, you ought to shift that political mask around a bit… it’s blocking your vision.

    No blood brother I… to nary a tribe, save the almost extinct Objectivologist Band of the Show-mes.

  46. Eclectic says:

    I suppose that would be “2 and 1″ I meant to write for the count.

    Objectivology doesn’t get one any editing privileges.

  47. VJ says:

    The Dirty Mac,

    The fascist Nazis routinely referred to their political opponents as “Leftists”, “Socialists”, “Leftist-Socialists”, and “Communists”, even when they were none.

    Sound familiar ?

    39.6% would not qualify as ‘highest’ as the top rate was lower IIRC than the entire post-war era except for the period 1986-1992.

    Never claimed it was the highest. I posted:

    …two greatest periods of economic prosperity in the past more than one hundred years when federal income tax rates were at their highest

    The first period was what you mentioned, and the greatest prosperity during that period was when the top rate was still 91% during the ’60s. The second period of greatest prosperity was with the second highest rate of 39.6% which occurred during the ’90s. Couldn’t be any simpler.

    Early Reagan the top rate was still around 50% and Kemp-Roth was phased in over three years.

    You must have forgotten that the tax rate cuts were retroactive (for the first time in history), and there was negative economic prosperity during Reagan’s terms.
    .

  48. VJ says:

    Eclectic,

    The late 90s came from a massive tech boom that was more responsible for the economy

    As I posted in the previous thread, the “massive tech boom” didn’t occur until years later after the national economy and stock market were already well on there way.

    Well, CBO disagrees with you

    No, if true, their disagreement would be with the Bureau of Economic Analysis. Highly doubtful.

    So-called ‘Supply-Side’ tax rate cuts were enacted three times, and GDP subsequently declined all three times.

    and tax cuts ? are quite likely to be accompanied with declines in GDP, because that’s what the whole happy enterprise is all about at those times

    Huh ?

    The American RightWing claims that tax rate cuts stimulate the national economy and increase both GDP and income tax revenue. Exactly the opposite happened all three times.

    I won’t even ask what the “tribe” nonsense is all about.
    .

  49. Brian B. says:

    VJ,

    you are right the Democrats are fantastic!! There does that make you happy? I am a Republican, but even I can see fault with my own party. Unless I am missing something, the Democrats can do no wrong Because of the “Clinton years”. HHHMM, I dont know how he got that Republican congress to go along with him? oh well, you will have your time in the sun again, and I am afraid politics aren’t so easy anymore..

  50. Eclectic says:

    Okay VJ, you, like all of us, have every right to view the world according to your perceptions.

    See you later. You’re a worthy, yet visceral, soldier.

  51. VJ says:

    Brian,

    you are right the Democrats are fantastic!! There does that make you happy?

    Why would it ? I never advanced such an argument, not to mention that the discussion was in regards to whether or not so-called ‘Suppy-Side’ economic policy had any validity, which history plainly displays, it does not.
    .

  52. Eclectic says:

    VJ,

    I’d like to humbly say in this one last come-back that I apologize for misinterpreting your tribal origins.

  53. The Dirty Mac says:

    “The fascist Nazis routinely referred to their political opponents as “Leftists”, “Socialists”, “Leftist-Socialists”, and “Communists”, even when they were none.

    Sound familiar ?”

    That must have been when the National Socialists (obviously a name meant only to fool people) tried to push through their tax cutting and deregulation agenda.

    “The second period of greatest prosperity was with the second highest rate of 39.6% which occurred during the ’90s.”

    How does Clinton’s capital gains tax cut for the Billionaires fit into this?

    “You must have forgotten that the tax rate cuts were retroactive (for the first time in history), and there was negative economic prosperity during Reagan’s terms.”

    I certainly forgot the latter.

  54. Brooks says:

    While the logic of the Laffer Curve is hardly disputable (and the Laffer Curve is really just a simple illustration of basic algebra and common sense regarding response to varying financial incentives), I leave the question of roughly where the U.S. is on the curve (or at least where it is NOT) to the professionals, the economists, and there seems to be a strong consensus among economists that we are nowhere near the point at which tax cuts have a net positive impact on revenues.