A week before the Bush v. Gore election, Stephen Moore and Art Laffer wrote a Wall Street Journal op-ed that endorsed George W. Bush. I didn’t mind the endorsement as much as the mendacity of this op-ed as it tried to convince the reader that the 1981 tax cut increased economic growth. The truth is that real GDP growth for the 1981 to 1992 period averaged 3.0% per year as opposed to the 3.5% average annual growth from the late 1940’s through 1980 – as well as the 3.7% per year average annual growth from 1993 to 2000.
Moore repeated his claims in what Kevin Drum calls Moore’s “maiden outing as a member of the WSJ editorial board”. Kevin notes that the so-called doubling of tax revenues during the 1980’s represented only an 18% increase in real per capita revenues and Kevin kindly provides this link. Note in particular that Social Insurance and Retirement Receipts increased by over 140% from 1980 to 1990 so all other taxes increased by only 81% in nominal terms. In real terms, tax revenues not including Social Insurance and Retirement Receipts rose by less than 18% even before adjusting for population increases. With a 10% increase in population, real tax revenues per capita excluding Social Insurance and Retirement Receipts rose by a mere 7% over the decade. Of course, one might ask with Social Insurance and Retirement Receipts rose by over 140% in nominal terms. One reason had to do with the payroll tax increase to pre-fund the Social Security benefits of the baby boom generation.
Kevin Drum is a very sharp blogger – especially for a non-economist – and he provides all we needed to know to decimate Moore’s op-ed. My problem is that Moore has known all of this for a long time as others repeatedly point out the folly of his Oct. 2000 op-ed with Laffer. Yet, he continues to make the same claim repeatedly. Stupidity? I think not. Mendacity? It seems so.
Update: Jerry Bowyer thinks Art Laffer deserves a Nobel Prize for that drawing on a cocktail napkin.
Update II: Movie Guy alerts us to Jack Kemp and Daniel Mitchell who NOW claim that the 2001 tax cut they promoted was never really anything they said would work. It would seem that Bowyer of NRO, Moore of WSJ, Kemp, and Mitchell all got the same talking points at the same time.