June 26, 2011 1 Comment
Got a kick out of this from a friend’s facebook feed:
Politics, parenting, science, education, and pretty much anything I find interesting
June 26, 2011 Leave a comment
Or maybe they don’t actually kill jobs. Nice column about the Republican idiocy on taxes by Bruce Bartlett (you knew it had to be him, or Jon Chait). Short version: pretty much every Republican economist has been completely wrong about the relationship between taxes and economic growth. He looks at the cases of 1982 and 1993. Here’s the long version:
Back in 1982, Ronald Reagan was persuaded that the deficit was such a severe impediment to growth that a tax increase to reduce it would be economically beneficial. Many in his party strenuously objected, citing research by Republican economists. For example, on August 12, 1982, U.S. Chamber of Commerce president Richard Lesher sent to Congress an analysis of the proposed tax increase. Said Lesher:
“If H.R. 4961 is passed in these troublesome economic times, we have no doubt that it will curb the economic recovery everyone wants. It will mean a lower cash flow as more businesses pay more taxes, with a depressing effect on stock prices. It will reduce incentives for the increased savings and investment so badly needed to improve productivity and create more jobs. It will mean higher prices for many products and services. It will increase government costs in caring for those who, because the economy is held down, cannot find employment.”
It would be hard to find an economic forecast that was more wrong in every respect. Looking at real gross domestic product, it grew 4.5 percent in 1983 and 7.2 percent in 1984 – an exceptionally strong performance. The stock market had one of its best years ever in 1983 – both the Dow Jones Industrial Average and the S&P 500 Index rose 35 percent. There was no increase in the rate of inflation, which was exactly the same in 1983 and 1984 as it was in 1982. The unemployment rate fell from 10.6 percent in December 1982 to 8.1 percent by December 1983 and 7.1 percent in December 1984.
The Chamber was not an outlier. Virtually every Republican economist made similar dire predictions.
1993 is basically the same story. And in 2001, they all predicted amazing economic growth that never happened from the Bush tax cuts. Yet people still take these claims seriously. I also love how the sainted Reagan would be driven out of the modern Republican party for raising taxes.