We noted earlier a rather dubious claim from Alan Reynolds:
No economist ever claimed all taxes are so distortionary that increasing any tax rate would reduce revenue. Art Laffer never said that. Bob Mundell never said that. Larry Lindsey, Larry Kudlow, Paul Craig Roberts, Steve Entin and Bruce Bartlett never said that. I never said that.
It would seem that Rich Lowry is not an economist:
Who says you can’t cut taxes, increase spending, and reduce the federal budget deficit all at the same time? That’s what the Bush administration has managed to do. Two decades after then-presidential candidate George H.W. Bush characterized Ronald Reagan’s idea that tax cuts would spur revenue-generating economic growth as “voodoo economics,” the witch doctor is again at work … The 2004 deficit had been projected to hit $521 billion, or 4.5 percent of gross domestic product.
I guess Mr. Lowry did not read this. Lowry concludes:
In light of that, we should be maintaining a high-growth, low-tax economy to reap all the benefits of growth, but dutifully restraining entitlements. That’s not sorcery, but just good sense.
However, notice that Lowry never mentions what real GDP growth has been over the past five years. I wonder if that’s because he realizes that the average annual growth rate has been anemic. But this simple fact undermines his whole spin.
Update: A few readers have suggested that Mr. Reynolds and Mr. Lowry are not contradicting each other, which prompts me to remind folks what Voodoo Economics means:
So why “voodoo” economics? There is some question about the magnitude of these effects, and the theory was way oversold at the time. Many “supply siders” argued that the incentive effects were so large that a reduction in tax rates would actually raise tax revenue, since the tax base would grow so much. There’s no sign that this happened, and indeed most economists were pretty skeptical of this prediction at the time. Quite to the contrary, the budget deficits exploded in the 1980s after tax rates were cut by Reagan in 1981. The response of private savings and labor supply to the Reagan tax cuts was minimal: the labor supply did not increase and the effect on private savings was swamped by the reduction in public savings (the increase in the budget deficit). Since labor supply and savings increased only marginally, government revenues did not increase (relative to GDP) and the budget deficit became very large. The Laffer curve hypothesis was was flatly contradicted. Moreover, the 1980s tax cuts did not increase the rate of growth of GDP and productivity, nor the investment and savings rates.
I think Alan Reynolds understands all of this but it’s clear that Rich Lowry does not.