Speaking of Supply-Side Stupidity
Justin Fox mocks one of his supply-side trolls before his turns on the ever stupid Stephen Moore:
If you take the very simple step of adjusting for inflation, you’ll find that real federal revenues were lower in 1984 than in 1982, and lower in 2004 than in 2002. So alex’s claim #3 is, on its face, false. But that’s not really the issue: Eventually, tax revenues did come to surpass their 1982 and 2002 levels in real terms. Which proves absolutely nothing about the efficacy of tax cuts. The U.S. economy has a tendency to grow, whether or not Congress is cutting taxes. And over time, that tendency will produce higher government revenues, whether or not Congress is cutting taxes. Now I’d like to believe that well-designed tax cuts can make the economy grow faster. But would any non-charlatan want to argue that all of the economic growth post-1982 and post-2002 was tax-cut-induced?
Justin provides a lot more wisdom but it’s time to visit Mark Thoma who has been reviewing what Rudy Giuliani and Michael Boskin have been saying. Mark turns to the coverage of Avi Zenilman:
Giuliani consistently echoes President Bush’s assertion in February 2006: “You cut taxes and the tax revenues increase.” But there’s a growing sentiment among many conservative economists – including those who generally support cutting taxes to spur economic growth and job creation – that Giuliani’s statements are simplistic and at worst misleading … Michael Boskin, a Giuliani economic adviser and Stanford professor who chaired the President’s Council of Economic Advisers under George H.W. Bush, said that the mayor’s claims about revenue and taxes need to be considered in a broader context. “The mayor has been very clear that he has an aggressive plan to work on both sides of the fiscal equation – both controlling spending and reducing and reforming taxes. All of the elements of the program are designed to reinforce each other and help the economy grow,” he said.
I need to break in – that’s trying to have it both ways. He’s not really lying because he really means you should cut programs too? Of course cutting programs increases revenues (though, like Laffer, I can think of counterexamples at the extremes where that isn’t true), but that’s not the issue and not what Giuliani is claiming.
Here is what I don’t understand. Michael Boskin is a very sensible fellow who has – like most sensible conservative economists – trashed the free lunch Laffer curve garbage. So why is Michael Boskin working for the Giuliani campaign? Then again – why is Greg Mankiw advising Mitt Romney who is also touting this Laffer dishonesty?