It would seem that the new and excellent blog by EconomistMom has already been infested by one Patrick R. Sullivan. Yes, she has to endure Donald Luskin’s Mini-Me like the rest of us – alas. On Phil Gramm – Luskin’s Mini-Me writes:
From there, he authored the spending controls in the Budget Act of 1990. Those controls were ultimately responsible for the budget surpluses of the late 90s. McCain having him as an adviser is more telling than anything in this political press release.
Translation – we switched from deficits to surpluses because we reduced nondefense Federal spending – right? WRONG! We switched from deficits to surpluses for two reasons: (1) Federal taxes as a share of GDP rose from 18.6% to 20.9%; and (2) defense spending as a share of GDP fell from just over 6.4% to less than 3.8%. While it is true that total Federal spending as a share of GDP fell, the nondefense component actually rose.
Of course, we have to routinely endure another rightwing troll named FA who made this comment about what EconomistMom wrote:
However, the quote she is attacking says 1997, and taxes WERE cut in 1997, the Capital Gains tax was cut.
Of course, EconomistMom knows this but she was talking about the 1993 income tax rate increase, which was the primary reason why Federal taxes as a share of GDP rose. When this is pointed out to our resident troll, he comes back with this Laugher:
taxes WERE cut and it wasn’t until after that cut that the economy had stellar growth
POST HOC ERGO PROPTER HOC! Of course, FA cannot point to a single economic analysis that would attribute real GDP growth exclusively or even partially to the 1997 reduction in the tax rate on capital gains. I have to wonder how much the GOP pays these two village idiots. Let’s hope it’s less than the minimum wage – otherwise, they are paying much more than these two dimwits are worth.
Update: I am aware that the American Council for Capital Formation had DRI prepare something called “Capital Gains Taxes and the Economy: A Retrospective Look” back in June of 1999. ACCF is an advocacy group so I would question whether something prepared on their behalf qualifies as an economic analysis. But let’s go back to something from CBPP entitled Would a Capital Gains Tax Cut Stimulate The Economy? published on September 20, 2001 when policymakers were last worried about a recession:
Some Congressional leaders are promoting a proposal to reduce the maximum tax rate on long-term capital gains from 20 percent to 15 percent. This reduction in the capital gains rate is being championed as a way to stimulate the economy. A reduction in the capital gains tax rate, however, is highly unlikely to provide a stimulus. In fact, it offers one of the least appropriate responses to the nation’s current economic challenges. Advocates of a capital gains tax cut have not traditionally claimed it has a stimulus effect. In the past, they have argued that it would provide long-term, rather than short-term, benefits for the economy. Even these long-run benefit arguments are weak. The Congressional Budget Office and other respected analysts have found that a capital gains tax cut would have very little impact on economic growth.
How could anyone suggest that the 1997 reduction in capital gains tax rate was responsible for the economic boom of the 1990’s? Oh yea – trolls are told by their political masters what to think!