It’s Time to Bury Supply-Side Economics
At this point, to continue to believe that tax cuts always lead to economic prosperity flatly ignores about two decades of evidence to the contrary, writes MoneyShow editor-at-large Howard R. Gold.
It's been the prevailing economic philosophy of the Republican Party since Ronald Reagan was elected president in 1980. Supply-side economics held that reducing marginal tax rates would spur economic growth, create jobs, and even generate tax revenue for the government.
And it makes sense in theory: If people keep more of what they make, they would logically work harder, spend more, and hire more people, right?
When you listen to supply-siders like Arthur Laffer, Stephen Moore, and Larry Kudlow, they always extol the Kennedy-Johnson tax cut of the 1960s-and especially President Reagan's tax cuts of the 1980s. But they rarely mention the 1990s or the 2000s.
Maybe that's because those two decades were almost a perfect controlled experiment that shattered their pet theories. President Bill Clinton raised marginal tax rates and the economy boomed and jobs were plentiful. President George W. Bush cut them, and we got only modest job growth.
In fact, there's more and more evidence suggesting that lowering marginal tax rates doesn't create many jobs at all.
- Read Howard's earlier take on the failed Bush tax cuts.
For years I've tried to find any economist-left, right, or center-who could estimate the number of jobs created by the Bush tax cuts, but without success.