January 12, 2006

Supply Side Econ Keeps on Rocking

Filed under: Economy,Taxes & Government — Tom @ 4:57 pm

The last para of this Reuters report (wonder why it’s last?) tells the big story of December’s Treasury Department report on the deficit:

Outlays jumped to $230.90 billion from $218.60 billion in December a year ago, while receipts were $241.88 billion, up from $215.75 billion in December 2004.

That’s a 12.1% increase in revenues, thanks to lower tax rates offset by much more economic tax-generating activity.

Supply-side tax cuts rock.

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2 Comments

  1. Your causal inference leaves much to be desired. The facts are that labor supply and savings (i.e. capital supply) are not that responsive to tax rates. To presume we are on the downward slope of the so-called Laffer curve, even in the long-run, is simply not defensible in the light of empirical evidence, both micro and macro. America’s fastest growth rates in the 50′s, 60′s, and 90′s coincided with relatively periods of relatively high taxes (and low deficits). And please don’t give me the “oh but it would have grown even faster with lower taxes” line – you simply don’t know. Only an extremist fringe of economists believe in supply-side economics; Bush Sr. was right to call it “Voodoo Economics.” Of course Republicans these days are into faith-based economics rather than science: the blind are leading the blind.

    Comment by David — January 12, 2006 @ 8:52 pm

  2. #1 – See my comprehensive follow-up post:

    Voodoo Schmoodoo:
    http://www.bizzyblog.com/?p=1241

    Comment by TBlumer — January 13, 2006 @ 2:06 am

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