Too long ago, Stephen Marglin wrote a book about economics titled, "The Dismal Science". Even though it was a beautifully written book, I have always taken perverse comfort in the title. My perverse comfort has something to do with the fact that economics has always captivated my mind in the same way rhubarb has. It hasn't.
But the book is not the point, here. It is this: we easily delude ourselves about economics. For instance, the notion that tax cuts will increase government revenue is a wildly popular political theme. As soon as little Republican tots are weaned from their mother's milk, they are fed the notion that cutting taxes will somehow, magically, actually increase government revenue. Little Republican tots first words are, "Ronald Reagan proved that!"
Almost every economist, whatever his or her political preference, agrees that, as Joel Slemord puts it, "Tax cuts don't pay for themselves! Period!"
(Edward Lotterman, in an article in the St. Paul Pioneer Press, details the delusion. He displays a litany of leading economists to make the point. He includes a series of economic advisors to Republican Presidents, including Reagan and Bush.)
What does happen is this:
1) Lowering taxes obviously decreases government income.
2) Lower tax rates do stimulate economic activity.
3) But, "No thoughtful person believes that this possible offset more than compensates for the first effect of these tax cuts. Not a single one."
When Ronald Reagan cut taxes, he also closed tax loopholes, which did increase government income. He created a larger tax base. And, for that reason, government income at the end of his tenure was higher than when he began. But if he had not cut taxes, the income would have been even higher.
What this means today is that if we cut the tax rate, the deficit will balloon, not shrink.
But try to tell that to a Tea Bagger, or almost any Republican politician! Joel Slemrod, who headed the Council of Economic Advisors under George W. Bush, says, "cranks and charlatans" sold this idea to the American people. Martin Feldstein, who headed the CEA under Reagan, agrees that tax cuts will not pay for themselves.
If you aren't going to raise government income to pay for government expenditures, you have to cut the hell out of something: the military, school systems, fire and police departments, quit making flu vaccines, eliminate Social Security, refuse to provide health care, stop repairing bridges and roads, sell the national parks to Continental Coal Company, or maybe ask health insurance companies to give us back our money.
There isn't a magic way to provide services. They have to be paid for.
Of course fraud, waste, and mismanagement should be fought against! All of it put together won't pay for the war in Iraq. That was a waste! And it was a fraud, and mismanaged, too.
But the book is not the point, here. It is this: we easily delude ourselves about economics. For instance, the notion that tax cuts will increase government revenue is a wildly popular political theme. As soon as little Republican tots are weaned from their mother's milk, they are fed the notion that cutting taxes will somehow, magically, actually increase government revenue. Little Republican tots first words are, "Ronald Reagan proved that!"
Almost every economist, whatever his or her political preference, agrees that, as Joel Slemord puts it, "Tax cuts don't pay for themselves! Period!"
(Edward Lotterman, in an article in the St. Paul Pioneer Press, details the delusion. He displays a litany of leading economists to make the point. He includes a series of economic advisors to Republican Presidents, including Reagan and Bush.)
What does happen is this:
1) Lowering taxes obviously decreases government income.
2) Lower tax rates do stimulate economic activity.
3) But, "No thoughtful person believes that this possible offset more than compensates for the first effect of these tax cuts. Not a single one."
When Ronald Reagan cut taxes, he also closed tax loopholes, which did increase government income. He created a larger tax base. And, for that reason, government income at the end of his tenure was higher than when he began. But if he had not cut taxes, the income would have been even higher.
What this means today is that if we cut the tax rate, the deficit will balloon, not shrink.
But try to tell that to a Tea Bagger, or almost any Republican politician! Joel Slemrod, who headed the Council of Economic Advisors under George W. Bush, says, "cranks and charlatans" sold this idea to the American people. Martin Feldstein, who headed the CEA under Reagan, agrees that tax cuts will not pay for themselves.
If you aren't going to raise government income to pay for government expenditures, you have to cut the hell out of something: the military, school systems, fire and police departments, quit making flu vaccines, eliminate Social Security, refuse to provide health care, stop repairing bridges and roads, sell the national parks to Continental Coal Company, or maybe ask health insurance companies to give us back our money.
There isn't a magic way to provide services. They have to be paid for.
Of course fraud, waste, and mismanagement should be fought against! All of it put together won't pay for the war in Iraq. That was a waste! And it was a fraud, and mismanaged, too.
Comments
Post a Comment