Political scientists Bryan D. Jones and Walter Williams have examined the rightwingers’ favorite rationalizations for tax cuts — supply-side economics and “kill the beast” — and discovered that they are not just wrong, they are completely backward. The economic consequences the theories predict not only don’t happen, the consequences are the opposite of what they predict.
Supply-side economics predicts that tax cuts stimulate so much economic activity that they pay for themselves, and therefore don’t need to be counteracted by decreases in government spending. “Kill the beast” is the theory that because tax cuts cause deficit spending, politicians will cut spending, because the American people abhor a deficit.
Sadly, no. Completely no.
As Jones and Williams conclude,
Our examination of tax policies since the Second World War show that neither work as claimed, that they never have worked as claimed and will never work as advertised.
[…]
The fiscal health of the nation was damaged by each tax cut except the Kennedy cut, which of course is the cut that supply-siders always cite.
President Kennedy’s tax cut did no harm because the economy was growing rapidly enough, even before the tax cut, that new tax revenues offset the decreased rates. In all other cases, the economy was not boosted by the cuts; national debt increased after each tax cut.
Contrary to the “kill the beast” advocates, the American people don’t seem to pay much attention to deficit spending and the size of the national debt. The historical record of tax cuts and spending suggests that what they care about is the level of government services and their cost.
Tax cuts make the public more liberal—that is, citizens want more government because they are getting lots of benefits at a cheap price.
When these two rationalizations for cutting taxes are eliminated, what’s left? Let’s try the truth. Politicians cut taxes because tax cuts are popular with the people who fund their election campaigns. Politicians get away with cutting taxes because too few people point out the negative consequences of tax cuts and the positive consequences of government programs.
As the saying goes, there ain’t no such thing as a free lunch. We can’t have an effective government without paying for it. The recent spate of bad economic news shows that Bush’s tax cuts have not resulted in a healthy economy. (Compare the last eight years with the previous eight following the Clinton Administration’s tax increase.) The spate of tragedies and disasters, from children dying for lack of medical care and thousands falling ill for lack of enforcing regulations to bridges collapsing for lack of adequate inspection and maintenance, shows the insidious consequences of cutting government services.
We need a government run by people whose economic decisions are based on reality, not ideology.
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