From Voodoo Economics to The Tax Fairy

Posted by AzBlueMeanie:

Steve Benen at the The Washington Monthly weighs in on the failure of faith based supply-side "trickle down" GOP economics:

TAX FAIRY WATCH…. Roll Call had a fascinating headline today, following Senate Minority Leader Mitch McConnell's (R-Ky.) appearance on CNN over the weekend. The headline read: "McConnell Blasts Deficit Spending, Urges Extension of Tax Cuts."

It's part of the newest push in Republican politics — the notion that tax cuts don't add to the deficit, all evidence to the contrary notwithstanding, because they pay for themselves. Thirty years ago this was considered "voodoo economics" by even many Republicans, but more recently, it's been labeled belief in the "tax fairy."

Credible economists dismiss the argument as nonsense, but the Republican Party in its entirety doesn't seem to care. Yesterday, House Republican Conference Chairman Mike Pence (R-Ind.) toed the party line.

"The reality is that as you study — when President Kennedy cut marginal tax rates, when Ronald Reagan cut marginal tax rates, when President Bush imposed those tax cuts, they actually generated economic growth, they expand the economy, they expand tax revenue," Pence said.

This morning, Florida's GOP Senate hopeful Marco Rubio demanded more tax cuts for the wealthy. When asked how he'd pay for them, he replied:

"Well, the question is they will be paid for because they create economic growth, especially in the long-term."

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This most recent push started about a week ago with Senate Minority Whip Jon Kyl (R-Ariz.) insisting that spending increases need to be paid for, but lawmakers shouldn't even try to pay for tax cuts. California Senate hopeful Carly Fiorina (R) soon followed, declaring, "You don't need to pay for tax cuts. They pay for themselves." Senate Majority Leader Mitch McConnell (R-Ky.) soon added that Bush's tax cuts, which created huge deficits, actually "increased revenue." Sen. Judd Gregg (R-N.H.) agreed that "tax cuts should not have to be offset." A few days later, Sen. Tom Coburn (R-Okla.) managed to sound even dumber, insisting that $678 billion in tax cuts for the wealthy are "not a cost."

As we talked about last week, these developments have made abundantly clear that conservative Republicans don't care at all about reducing the deficit, but that's really just the beginning of the larger revelation here. By embracing economic nonsense with such enthusiasm, Republicans are also making it painfully obvious that they don't care about reality, either.

Krugman's label — "invincible ignorance" — continues to ring true.

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Krugman:

Just in case you had some lingering notion that anyone in the Republican party was fiscally responsible…

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[L]ook: it’s been a long time since Morning in America. We’ve now been through two two-term administrations, one of which raised taxes, the other of which cut them. Which looks like it presided over a more vibrant economy?

And who in their right mind would describe the Bush economy as “vibrant”, anyway? Even during the peak of the housing bubble, it never achieved the kind of job growth that was routine in the Clinton years.

Oh, and as for revenue: we have a growing economy, which means that revenue tends, other things equal, to rise over time. But here’s what real federal revenue looked like since 1992:

Rapid, steady growth in the Clinton years; much less thereafter, even if you stop the clock just before the housing bubble burst.

In short, the notion that tax cuts pay for themselves has no empirical support. And yet the GOP leadership — which claims to be oh so worried about the deficit — is willing to stake America’s solvency on its belief that tax cuts are free.

Update: Also, for those readers who complain that I’m too partisan, that I should admit that there are two sides to the issues, this is a prime example of my problem. How am I supposed to pretend that these are serious people? The facts really do have a well-known liberal bias.