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Krugman on Reagan and Supply Side Economics
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Is it really possible that all the triumphant declarations that the Reagan tax cuts led to a revenue boom — declarations that you see in highly respectable places — are based on nothing but a failure to make the most elementary corrections for inflation and population growth? Yes, it is.
-- Paul Krugman
Yeah, Krugman is a partisan, but his arguments are serious. I wouldn't go so far as to agree that there was nothing to supply-side theory, as I buy into conventional wisdom that when taxes are at a high enough rate, lower taxes will be economically productive, and I am inclined to believe that those tax rates may have been that high when Reagan took office. I am also inclined to agree that too much was made of this Laffer curve business, and that this has been especially abused in Dubya's tenure.
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Is it really possible that all the triumphant declarations that the Reagan tax cuts led to a revenue boom — declarations that you see in highly respectable places — are based on nothing but a failure to make the most elementary corrections for inflation and population growth? Yes, it is.
-- Paul Krugman
Yeah, Krugman is a partisan, but his arguments are serious. I wouldn't go so far as to agree that there was nothing to supply-side theory, as I buy into conventional wisdom that when taxes are at a high enough rate, lower taxes will be economically productive, and I am inclined to believe that those tax rates may have been that high when Reagan took office. I am also inclined to agree that too much was made of this Laffer curve business, and that this has been especially abused in Dubya's tenure.