Understanding Anew Supply-Side Economics

[monk222]

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Since the 2006 elections, we've been seeing a lot shifts, some subtle and some not so subtle, to the left. Now we see some movement at the root concept of supply-side economics, which triumphed with the Reagan Administration:

Today, supply-side economics has become associated with an obsession for cutting taxes under any and all circumstances. No longer do its advocates in Congress and elsewhere confine themselves to cutting marginal tax rates — the tax on each additional dollar earned — as the original supply-siders did. Rather, they support even the most gimmicky, economically dubious tax cuts with the same intensity.

Now, there is still a legitimate debate about the size of government and how big or minimal it should be. But it will be carried on more honestly. The right has been having it both ways, saying that we increase government revenue by cutting taxes - you can have your cake and eat, too. The general rule of common sense is reclaiming some of that ground: when you cut taxes, you are usually cutting revenue, too. You cannot get something for nothing.

Maybe less government means a more robust and richer private economy and a wealthier society, but that is a different debate, a more fundamental one. Americans have yet to demonstrate they want a smaller government in fact, as we have other values of fairness that we are also concerned about. With the bills on the war still coming in, and with more calls for better health coverage, one imagines that taxes will be going up.


(Source: Bruce Bartlett for The New York Times)

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