The late (Democratic) humorist Will Rogers once said, “it isn't what we don't know that gives us trouble, it's what we know that ain’t so.” A great deal of Republican economics qualifies as what we know that ain’t so. Not, I would add, by real conservative economists, who know better, but by the right-wing propaganda machine that churns out the prolefeed.
Let’s take a look at one of the GOP’s most remarkable claims: that tax cuts raise revenue. Now, think about it. If this were true, wouldn’t liberals want tax cuts so there would be more to spend on our nefarious social programs? I’ll return to this later. This counter-intuitive claim is everywhere: on PolicyMic, the right’s major pundits, and of course, Republican candidates.
Under the circumstances, it seems almost rude to look at the actual numbers. Here are federal receipts in millions of constant (2005) dollars right before and after the Reagan tax cut.
Wow! Tax rates went down, and tax revenue went down. If you want an extra laugh, the “pundit” link to Michael Medved above shows similar data, but as a percent of GDP. His summary is a textbook case in dishonesty. I’ve copied his own table below.I added the last column based on tax data here and CPI here.
Fed Rcpts %GDP
Out of all these years, Medved cherry-picks the three for his summary in italics, saying they are all 18%. So, the big drop after the 2001 tax cuts? Never happened, down the memory hole. The big drop after the 2001 tax cuts (including an economic expansion when we should have been saving for a rainy day instead of running deficits)? Down the memory hole. And while he chose years late in the Reagan and Bush presidencies, for some (obvious) reason, he plucks 1995 from the very beginning of the Clinton boom, disregarding his second term that disproves his 18% claim. I mean, with some pundits you have to google the correct numbers, but he put them right there for everyone to see how wrong he is?! I guess he thinks we’re not just gullible, but very lazy.
You can see from this table that both income tax and total federal receipts also fell after the Bush tax cuts. For absolute numbers instead of GDP percentage you can check the tables I have already linked. It’s amazing that people who lived through these times nevertheless pretend to an economic history that didn’t happen.
Republican economics is just as wrong on the other side of the equation. They promised us that the Clinton tax rates would bring disaster. If we could have some more of that disaster, I’d ask my own wife to be Clinton’s intern.
It is true that tax revenues went up after the JFK tax cut, but then the top marginal tax rate was 70%. Empirical evidence is clear that today’s tax rates are on the left side of the primitive Laffer Curve where rate cuts mean revenue cuts. Instead, voodoo economists persist in telling us we can have our cake and eat it too. The following chart shows that’s a con.
What makes this debate especially remarkable is that a major architect of the Reagan tax cuts, his budget director David Stockman, long since admitted what we liberals suspected all along. Whatever the story was for the masses, no one really thinks tax cuts are intended to fuel big government. The huge deficits created by Reaganomics were intended as the first step of a program to “Starve the Beast”, and the reaction against the debt was supposed to result in the evisceration of social programs like Social Security and Medicare that Republicans hated then, and hate now, as interference with the dog-eat-dog world of their favorite fantasy fiction.
You can fool some of the people all of the time and all of the people some of the time. I hope that the data in this post will help readers move from the first category to the second.