Last updated on 2015-10-31
GOP Presidential candidate Donald Trump repeated in Wednesday night’s debate in Boulder that he’ll cut taxes $10 trillion without increasing the deficit, thanks to the fact that tax cuts will make the economy take off like a rocket.
Houston, the supply-siders have a problem:
At the national level, there is virtually no evidence that broad-based income tax rate cuts have a positive effect on growth. The Reagan tax cuts in the early 1980s coincided with a period of average growth—measured from peak to peak of the business cycle. Evidence that the tax cuts affected growth is weak or nonexistent. In 1989, research by Martin Feldstein, President Reagan’s chief economic adviser, and Doug Elmendorf, former Congressional Budget Office director, concluded that the 1981 tax cuts had essentially no net impact on growth. They found no evidence that the 1981 tax cuts induced people to work more, and concluded instead that the 1980s recovery was chiefly the result of monetary policy.
No one now credibly claims that the 2001 and 2003 Bush tax cuts stimulated growth. The two acts slashed tax rates on ordinary income, capital gains, dividends, and estates, but economic growth remained sluggish from 2001 through 2007, when the economy tanked. The growth that did occur is widely thought to be a result of the Federal Reserve System’s easy money policy, which led to more borrowing, especially in the housing market [William Gale, Aaron Krupkin, and Kim Rueben, “The Growth Mirage: State Tax Cuts Do Not Automatically Lead to Economic Growth,” Urban Institute and Brookings Institution: Tax Policy Center, 2015.09.08].
Senator Ted Cruz nonetheless counterfactually asserted Wednesday, “[A]s Reagan demonstrated, if we cut taxes, we can bring back growth.”
Senator Marco Rubio, Governor John Kasich, and Governor Jeb Bush further seconded the disproven supply-side line. History proves their supply-side assertions wrong in the other direction, in that the tax increases of the 1940s and 1950s accompanied an American economy that steamed right along:
But the Reagan and Bush tax cuts, each about 2 percent of gross domestic product (GDP), were tiny compared with the tax increases during and after World War II. During this period, federal taxes rose more than 10 percent of GDP. Income tax rates went up for nearly everyone and stayed high for decades. Between 1944 and 1963, the top income tax rate never fell below 90 percent. According to supply-side theory, this tax rate should have killed the economy. Instead, Stokey and Rebelo (1995) found real per capita growth differed little from the historical averages. Granted, World War II was a unique historical experience, and the United States emerged from the war as the world leader in economics and politics, so an equivalent-sized tax increase would likely have a more deleterious effect now. Still, it is informative that growth rates were essentially uninterrupted by the massive and permanent shift in government revenues and spending the war induced [Gale et al., 2015.09.08].
Gale et al. cite copious literature showing that top marginal rates and total tax burdens show little correlation with economic growth here or abroad (read Piketty!).
Kasich dismissed Ben Carson’s and Donald Trump’s fiscal policies as “fantasy.” Perhaps he should expand that critique and adopt the term coined by Jeb Bush’s dad to help dispel the entire GOP field’s fiscal myth-making:
Vodoo economics indeed. Good one Cory! Old man Bush was right about that and spoke the truth which is something republicans sorely lack these days. I wonder how their base can stomach the lies they tell with such a straight face. We see that here in South Dakota and we see it in other red states, how can that be so prevalent? I drink the same water and tell the truth, so it cannot be that. It must be the corruption, that is the common denominator I think. Only a crook and a liar would be so good at the non flinching ability to tell those kinds of lies while you are peddling the myth
Don’t forget Kansas, Cory:
http://www.kansascity.com/opinion/opn-columns-blogs/yael-t-abouhalkah/article31716450.html
Don’t forget Rapid City, Bill:
http://rapidcityjournal.com/news/local/task-force-determines-million-needed-to-boost-schools/article_62c1270c-465e-52c1-8ff1-caab25b24b10.html
Good that feel you sorry enough for Powers as to keep his blog alive, Fleming.
First of all on a side note, the RNC within the hour cancelled or postponed their scheduled GOP Presidential debate on MSNBC because of too many gotcha questions during CNBC debate. I think they are afraid of Rachael Maddow.
As I listened to the debate on Wednesday when it came to taxes and the economy these candidates seemed to be just making up numbers and expecting us to believe them. It was bizarre to say the least.
When it comes to republican tax plans the first question I will always have is how will their tax plans benefit the 1% and take away from the rest of us.
There was a time when Democrats were labeled as tax and spend Democrats and still are to some degree, but when you look a Cory’s analysis the republicans are the tax and spend party.
This is particularly true in South Dakota where every tax and fee increase in our state for the past 40 years came from republicans.
it’s very christian of you.
“Read my lips …………….”
I’m disappointed in you Cory! you were doing so well, then you go and sucked up in the National Brew-haha. Please come back to South Dakota
Clark, your butt-buddy Pat got sucked up by nutjob Paul Ryan’s coronation as Speaker but you offered no outrage over there.
The main thing that would do the job would be the Medicaid Expansion. While that would bring in a billion, it would also do something to endanger Daugaard and the republican hold they have on the state by enrolling voters. Indeed, there are some 47,000 South Dakotans that presently qualify for the Medicaid Expansion in the category of working poor. Many of these are not registered voters so by the expansion, the state would have to provide voter registration. http://www.justice.gov/crt/national-voter-registration-act-1993-nvra See sections 12 through 15.
Here is something else that would boost the economic well being of our state. https://www.youtube.com/watch?v=Sezhr7jbrlk
Roger,Rachel,like Bil Clinton is a bona fide Rhodes Scholar and wingnuts decided they didn’t want to become Rhode’s kill,especially by a Lesbian.
Kansas should be all the proof nutjobs need to show that austerity measures do not work. Gawd these guys are dumb.
This GOP Voodoo, humbug economic mythology is also called zombie economics because they keep dragging it out of repeated burials caused by a breath of reality.
More tax breaks for the rich don’t stimulate purchases, they are already buying everything they need. They just acquire more assets and a bigger chunk of the economy which further reduces benefits for the 99% of the rest of us.
Meanwhile, the SD GOP thinks taxing small cars and farmland more will solve all the problems their nonsense has generated. We just got done paying property taxes. The property taxes have gone up so much already that they are too much like the land payments we made for years to buy the land. Income taxes all hit those of us on the bottom end of the economy disproportionately compared to hedge fund managers and the others in the top 1% of the economy.
Good point about Kansas, Bill! The Gale-Krupkin-Rueben report actually focuses on the experience of states like Kansas to extend George H.W. Bush’s wisdom about supply-side economics from the national level to the state level. On Kansas, they make the following observations:
Gale et al. note Governor Brownback, in true Republican form, resists the evidence before him, concocting new rationalizations for disproven theory that harms his state:
Shifting the ground of the argument to avoid empirical evidence that they are wrong: supply-siders sound like intelligent design advocates, believing what they want to believe, not what the world says actually happens.
MC, I apologize for my brief diversion from my primary mission. As the Presidential race heats up, I fear I will be obliged to engage in a few more such diversions.
However, for what it’s worth, including the article I just put up on bird flu and robust backyard chickens, 36 of my last 40 posts have focused on South Dakota news (that includes one post on Senator Mike Rounds’s positive assessment of President Obama’s military policy in Afghanistan, which is at least as relevant to the South Dakota blogosphere as Pat’s continual stream of press releases from Washington.
And MC, we miss you! Turn up your own War College heat, give us some original South Dakota commentary from your side of the political spectrum to enrich the conversation!
Jerry, I fear you may be right. We can hand out small business loans to an able-bodied egg factory in Flandreau, but we can’t give the working poor what’s basically a health loan in the form of Medicaid expansion—here’s health insurance, now get healthy again so you can get back in the workforce and pay us back by making more money and paying more taxes—because the one-party regime gains more by helping corporate pals and keeping the working class too sick or too busy to vote.
http://www.nytimes.com/2015/02/12/us/politics/education-is-newest-target-of-kansas-budget-cuts.html?_r=0
Brownback sees what is going on in Kansas because of his tax policies and is still in denial. Typical.
No need to apologize Cory, politics affects our lives if it is local state or federal. MC knows you are right and just wants to stop this conversation.
Reagan raised taxes because his tax cuts to boost spending is not sustainable. There was a small glitch when profits went up after Reagans tax cuts because the rich had never seen such low taxes so they took their money out of tax shelters where they had saved up profits for decades, and ran it through as profit so they could pay low taxes which they knew would not last. So profits were artificially high for one year and someone at a University did a short term research on it to fool people into thinking voodoo economics worked. When I went back to school in the nineties the youth had been fooled into not believing anything about economics anymore.
The republicans who deny Medicaid Expansion should be tried for war crimes. By denying the basic right of survival, how are republicans any different than the North Korean dictator. The crimes they are committing are crimes against humanity. Here is a recorded one in Idaho. http://www.dailykos.com/story/2015/10/31/1440258/–Death-by-poverty-in-Idaho
I know Bob Mercer is busy, but if he has some time on this hands, maybe check around to see how many of our fellow South Dakotans have been killed in this war on poverty waged by the regime in Pierre. Someone needs to broadcast the inhumane treatment of our fellow citizens here, our working poor. Daugaards health plan for the working poor is if you get sick, just die already.
Jerry,
You seem to have plenty of time on your hands. Why don’t you take the time to research it. Bob would I’m sure be very appreciative of the stats you come up with and could verify your sources. If you need help might I suggest contacting a reference librarian at one of our fine universities. They offer a great service.
Jerry,
Actually you could contact Northern State University up in Aberdeen on Monday and ask for a reference librarian. NSU is a repository for government documents. He or she might be able to assist you in getting the data you need.
Jerry,
No response? Come on! Better than solving world problems all day here and smoking dope. lol
Hey, Lynn, go easy on the gratuitous insult. Jerry offers a reasonable research suggestion, albeit one that would be hard for even a good reporter like Bob Mercer to tackle. Is there a problem with the hypothesis that seems to lie behind his research request, that the GOP myth-making that supports tax cuts for the rich overlaps with the GOP myth-making that demonizes the poor and excuses undoing the social safety net?
Cory,
Are you kidding? Have you looked at the insults they have hurled at me when I was simply asking questions and then voicing my opposition regarding their obsession? That was before I responded. lol It’s happened to a few others who dared to post anything in opposition regarding the same subject since they were immediately jumped on.
The point is that Jerry posts for hours and hours all day every day solving world problems on this blog and obviously has the time to do something about it. I simply provided a valuable resource if he is serious about finding the information rather than push it on Bob Mercer who probably already has a full plate with limited resources.
Temper temper dear Lynn, your jugular is exposing itself. Sorry that some of South Dakota’s issues cause me to post here. The world is as simple as your mind Lynn, try to expand it. We are fortunate and privileged people who have many sources to find truths and consequences other than New Mexico. If there, please do not miss the hot springs, very cool.
I would love to work with Mr. Mercer, but he is a professional and alas, I am but a poor wintered soul that only seeks to enlighten you and those like you who refuse to see the facts of why our many social problems stem from the outdated and clearly stupid cannabis persecution. Mr. Porter is currently living in Colorado so he has his finger on the pulse of that state’s intelligent move to legalization. This state has James Dobson’s Focus on the Family headquarters there for crying out loud. Yet they have legalized cannabis for the betterment of democracy. You see Lynn, the people voted for this and it passed. They also voted for Cory Gardner one of your kind of guys. If a place that is as conservative as Colorado can see the light, I think that it is time for South Dakota and the rest of our nation to do the same.
Potheads. lol
“….concluded instead that the 1980s recovery was chiefly the result of monetary policy.”….. Huh, image that and who was responsible for the monetary policy back then, you ask? None other than Paul Volcker, one of the few major Carter appointees, which the Reagan administration reappointed…. I guess eventually we were “better off than four years ago”…. thanks to Jimmy and Paul, and not Ronny.
This whole supply-side economic myth has been at a great cost to America’s future over the past thirty years. It is based on the Laffer curve or should I say the “laughable curve.”
JFK experimented with it in 1962, but his tax cuts were paid with other cuts in the budget unlike Reagan and “Dubya” who just added the initial costs on to the deficit. With JFK there was some positive effects from it, but it was also the first time since the 1920s this had been tried. I do believe once in a great while a one time attempt at this tax strategy can work, but it has been used too many times over the past 30 years and what economists call its “marginal utility” has now been neutered for some time to come.
We all understand the idea of “tax free zones,” especially in areas of blight to hopefully invite redevelopment and it can work at times and this genius is claimed by supply siders, but the major attempts by Reagan and “Dubya” with supply side economics have only yielded greater deficits with no real growth as Cory’s research proves. Simply put, you give a dollar to a rich man and he will put it in the bank where it sits. You give a dollar to a working class person and they will most likely spend it and thus stimulate the economy….
(Insults beget insults—none are justified. Lynn, your insult of Jerry stuck out in this thread because it was an insertion of a baseless accusation (sorry, I haven’t followed who all has declared drug usage) dragging grievances from an entirely separate issue into a discussion of GOP fiscal-policy myths. Jumping into every thread and calling the commenters “potheads” is as unproductive and unenlightening as Sibby’s erstwhile jumping into every thread and calling everyone New Age theocrats.)
aspirin is a drug.
http://www.wddty.com/aspirin-it-kills-20-000-americans-every-year.html
SD will be the last state in the nation, as always, to legalize cannabis, and I think you boys deep down know it. But really, please back off on Lynn. She has a damn right to her own opinion and I do get how she feels about the cannabis issue. I feel the same about people who abuse alcohol.
Lynn is right that people are turned away from this blog because of circle of wagons mentality to anyone who disagrees with their point of view and it IS HURTING the progressive cause.
Jenny,
Thank you! People are not only turned away from this blog but and I can’t stress this enough the South Dakota Democratic Party also because of the behavior on this blog. There will be more also with everything being archived for reference. It’s a very divisive issue and as you know South Dakota has enough issues already but the party and candidates that have any association with this will be negatively affected in fundraising and most of all on election day. Problem solving? Try problem creating that will overshadow gains elsewhere!
Notice the familiar pattern as in dealing with others that have substance abuse issues? They attack, threaten with violence (“hit claw hammer in head after wiping blood from another”) and then dismissed as trivia, manipulate and will fight like hell to get their fix.
Let them live in their versions of reality if that comforts them. It’s too bad.
Cory recently tweeted that DFP has had 15 posts go over 1000 hits while DWC and the Dakota Progressive have had only one post apiece with over a 1000 hits.
SDDP has been put on notice.
This blog isn’t trying to be the mouthpiece for the South Dakota Democratic Party if I remember correctly. Labels like Democrat and Republican are way oversimplified anyway. Very few fit perfectly in to these two political teams as they exist today and our views will keep changing unless we have completely shut ourselves off and identify with a group rather than ideas and the best answers for policy which is gonna be pick and choose. A lot of ideas are gonna be unpopular but Cory leaves his comment section pretty open unless things go too far. Personally I would love to hear and encourage different voices or there becomes kind of a group think of accepted and favored opinions. Quite a few of the Libertarian ideas of which there are many hybrids are quite interesting and worth exploring IMO. Anonymity does allow a person to say more of what they really think although it is easy to get a little too flowery.
Jerry, I thought your comment was right on the money. As for Lynn, it is unfortunate that she has devolved into a name calling blogger who is unwilling to discuss reasonable problems with the 85 year old “jail em” anti-marijuana policies that apparently make her pickle squirt.
Then turn away, Lynn. But leave me out of your alleged phone calls. I am not the Democratic Party.
30-90 deaths per year have been estimated for south dakota. it is happening here, now. jerry’s post could not be more correct and appropriate.
lynn, your coarseness is really off-putting. i read jerry all the time and had no idea he was a pot-head…nor is it any of my business nor do I care. I have had terrible times in my life from addiction but find your approach much like the dreaded alanon-hack-saw approach to empathy and love. i have no idea if it fits, but to suggest any person use their time in a way you denigrate is a sad approach, imo.