Why the GOP Won't Admit Supply-Side Econ Has Failed

The Republican Party has long promoted itself as the party of business. Republicans understand the needs of business, we are told, and if the country would leave the economy in their hands business would boom. All we need to do is to give those at the very top of the income distribution – the “job creators” – more income through tax breaks, and then sit back and wait for the magic happen. Our investment in the wealthy will produce remarkable economic growth, and everyone will be better off.

The Bush tax cuts were a test of these claims about supply-side economic policies. To justify the tax cuts the nation was, in effect, given a business prospectus from the Republican Party. We were promised that cutting taxes on the wealthy would result in much higher economic growth and broadly shared prosperity. For those who wondered how we would pay for such a large cut to the government’s revenue stream, the Republican prospectus had a remarkable claim. The tax cuts wouldn’t cost us anything. Growth would be so strong that the tax cuts would more than pay for themselves. Even those who admitted that the tax cuts might not be fully self-financing still made strong claims about faster economic growth offsetting much of the lost revenue from the tax cuts.

The reality, of course, has been quite different. There is little evidence that the Bush tax cuts, or any other tax cuts directed at the so-called job creators, have had a noticeable effect on economic growth. And the promise of broadly shared prosperity has not been realized. Most of the gains from economic growth in recent decades have gone to the top of the income distribution while the inflation adjusted wages of the working class have been relatively flat. Furthermore, the tax cuts have not paid for themselves as promised, and it hasn’t even been close. The Bush tax cuts have already cost us trillions in revenue, and if they are extended for high income tax payers, they will cost us roughly another trillion over the next decade.

The failure of Republicans to deliver on their promise that tax cuts would be mostly self-financing is a large factor in the deterioration in our long-run fiscal outlook, and it is putting considerable pressure on programs such as Social Security. In fact, the Bush tax cuts can be thought of as a loan from the Social Security Trust Fund that was supposed to be paid back with the revenues from higher economic growth, a loan that is presently in default.

To see this, recall that the government began intentionally collecting a surplus from the Social Security program beginning in 1983 in order to prefund the retirement needs of baby boomers. The idea was to run a surplus for several decades while the baby-boomers were still working to get ready for the deficit years the system would experience after they retired.

The revenue from Social Security over and above what was needed to fund payouts reduced the overall government debt and allowed taxes to be lower than they could have been without these surplus funds. For example, the surplus that Bush inherited from the Clinton administration was largely due to the Social Security Trust Fund, and Bush argued it would be better to give this surplus to the private sector through tax cuts than to leave it in the hands of the government. But it wasn’t better. The income of the wealthy grew as they pocketed the tax cuts, but workers experienced stagnant wages, a recession that hit working class households particularly hard, and intense pressure to cut important social programs.

Despite their failed promises, the Republican Party is asking that we extend the tax cuts for the wealthy, and some are even calling for further reductions in tax rates. However, if the Republican Party is truly the party of business, then surely it will understand that no responsible financial institution would continue to invest in a business that failed meet, or even come close to the growth and revenue projections that justified the investment in the first place. The payoffs from tax cuts that were promised during the Bush years have not been realized, and the failed promises about growth and revenue have damaged the health, education, and retirement programs the working class depends upon in our increasingly globalized economy.

A true party of business would end our investment in the false promise of supply-side economics. However, a party with a goal of reducing the scale of programs such as Social Security and Medicare along with delivering tax cuts to wealthy political backers would use arguments about the economic effects of tax cuts to disguise its true intentions. Which description fits best? Many Republicans still claim that tax cuts for the wealthy enhance economic growth despite the evidence to the contrary, but it’s rare to hear a Republican admit that these supply-side policies have failed.

I did not say tax cuts equal deficit spending. I pointed out that we’re spending like maniacs, and have been for a long time, and that spending has often been wrapped in the excuse of “supply side”. While pure theoretical supply side is about tax cuts, in practice since Reagan got elected it’s included massive spending. Which I pointed out needed to end under Bush 1.

Ok, if you are not equating tax cuts with spending, you need to clearly differentiate "spending" from "supply side." There is NO spending in "supply side" economics. Supply-side ONLY refers to stimulating the economy through lowering marginal tax rates, and has nothing whatsoever to do with spending.

Your language is extremely imprecise.

My language was very precise, you just didn’t bother to actually read it. Supply side in practice, Reaganomics, involved a lot of spending, spending that needed to recede in the Bush 1 admin and hasn’t. That’s what I said THE FIRST TIME and you didn’t bother to pay attention. Spend more time reading and less time assuming, because all the imprecision came out of your head, not my keyboard.

No, it simply does NOT involve "a lot of spending." If you have ever read Art Laffer or the "Supply Side Revolution," you'd realize that supply side has nothing to do with government spending. Reagan wanted to cap government spending, but had a Cold War to fight. But his diaries make clear he opposed that spending. Not one supply-sider I know makes an argument for increased spending, so, your theories are coming out of YOUR keyboard, not out of my head.

Give me ONE major supply side theorist who argues that supply side involves SPENDING.

Well sir, I started posting to you with an ad hominem (and you know it was somewhat light hearted), yet you kept conversing and didn't complain; I kept insulting you in every post in a fun sort of way, and you continued to respond and said nothing.

So now that you can't answer the points I made, you suddenly complain about the ad hominems.

Here's what you didn't deal with in our conversation:

1. You couldn't handle the clear problems with the lie that Obamacare would lower health care costs (it didn't, it won't). You even tried to claim your premiums slowed their increase, which had to be a lie, no one has had that happen, so for some reason you didn't care that you were lied to.
2. You pretended the article I linked didn't show the schizophrenia (insanity) of Bambi voters. It did. You may not be one of them, you somehow believe the stuff he does is good and fixes things, although I question anyone's sanity who thinks we can cut costs in health care by adding a huge government bureaucracy to the mix. There was no GOTCHA at all.

There were several other things you never dealt with either, so I presume you can't. As to ignoring facts and figures, you did that with anyone that posted them to you on this thread, not me.

Btw, do you know who was the first to run on and practice supply side economics before it was called that? Do you know who first proposed that by lowering tax rates we would actually gain more revenue? I bet you don't.........

You didn’t quote what mattered. Here’s what I said:
“While pure theoretical supply side is about tax cuts, in practice since Reagan got elected it’s included massive spending. “ 141

And then you demanded:
“Give me ONE major supply side theorist who argues that supply side involves SPENDING. “ 145

Now since I said that the theory didn’t include spending, but the practice HAS, your demand goes directly against what I said.

The facts are the facts, and the fact is you’re a liar. Goodbye.

Facts are indeed facts and the fact is that you, sir ar a liar. You stated "Because supply side means a lot of deficit spending . . ."

Did you or did you not say that? (You did and it is a flat out falsehood.)

Supply side does not involve ANY deficit spending because tax cuts pay for themselves in growth (in the 80s it was 40% MORE revenue after the cuts). Spending is entirely separate from revenue---a point you seem incapable of grasping. In the 20s, tax cuts were neutral---but we had surpluses because spending FELL.

Did you or did you not say "we are in our fourth decade of SUPPLY SIDE SPENDING. . ." You did and it's flat out wrong---supply side does not involve ANY spending. It is about investment. Then, rather than admit you don't know the slightest thing about supply side theory, you called names and tried to dodge.

Did you or did you not say that supply side "was supposed to be temporary"? You did and it's flat wrong. Supply side cuts are to be permanent and EVEN adjusted further downward as the economy grows. The investment side was NEVER temporary, and if you had ever listened to Art Laffer's lectures you would know that.

The fact that you are completely ignorant of supply side theory is one thing, but to blatantly lie and say you did not say what your post clearly said tells us volumes about your character---or lack thereof. I even gave you an out to say your language was imprecise, but you were too venal or stupid to take it.

Oh look another festival of lies from the liar. You’re lying about what I said AGAIN. You’re just a no good filthy lying bag of feces. I will not be reading anymore of your pathetic bags of lies, so you might as well stop.

Here’s what I said
While pure theoretical supply side is about tax cuts, in practice since Reagan got elected it’s included massive spending.

It shows that EVERY SINGLE SENTENCE in your post 150 is a FILTHY DISGUSTING PATHETIC WORTHLESS LIE. And the fact that you continue proves that you’re a worthless human being. Be gone filth.

I've never in my life seen anyone who wasn't a Democrat lie so blatantly about what he said. Here is what you said. I know because I double checked your quotes. Let me quote you yet again:

"we are in our fourth decade of SUPPLY SIDE SPENDING. . ."

No. There is no such thing. This is simply false. It shows you just absolutely don't know what you're talking about and are too pigheaded to admit it. For the fifth time: SUPPLY SIDE HAS NOTHING WHATSOEVER TO DO WITH SPENDING, EITHER IN THEORY OR IN PRACTICE.

"Because supply side means a lot of deficit spending . . ."

No, it does not. Not in theory, not in practice, nowhere. You can dodge all you want, but you would be far better to admit you were making crap up and that you are clueless above clueless as to what supply side theory actually is.

Now, if "every single sentence" in my post is a "filthy disgusting pathetic worthless lie," ALL of these quotes are yours. Figure out who the liar is. And I even gave you an out yet again---that you are clueless and not a serial perjurer. But apparently you prefer to be wicked rather than stupid.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.