Supply-Side Economics
 

Here's an interesting, informative piece spelling out the intellectual bankruptcy of supply-side economics:

Modern conservatism is built around the promise of supply-side economics — an economic philosophy that claimed to allow Republicans to cut taxes, maintain popular social programs, robustly fund defense and balance the budget. The problem: Supply-side economics hasn’t actually worked as promised, but the GOP refuses to abandon it.

And that, more than hypocrisy, is the real problem facing Republicans — they have principles; those principles just don’t work.

https://www.washingtonpost.com/news/...ed-principles/

They type of factually challenged article that you'd expect from WaPo. Bravo.


The article conveniently forgets that the primary reason the deficit "exploded" was spending. As your favorite paper was at least capable of noticing at the time:

For each of the past several years, President Reagan has sent a new budget to Capitol Hill, and Congress has promptly pronounced it DOA -- dead on arrival.

This year, with the drama over the Gramm-Rudman-Hollings balanced-budget act beginning, the early reaction is different: Most Republicans as well as Democrats have declared the administration's budget DBA -- dead before arrival.

As the article goes on to detail, year after year CONGRESS refused to give up their favorite pet spending programs, even after being elected to Congress with promises to reduce spending. Yet, revenues dramatically increased each year:

FY 1989 - $991 billion
FY 1988 - $909 billion
FY 1987 - $854 billion
FY 1986 - $769 billion
FY 1985 - $734 billion
FY 1984 - $666 billion
FY 1983 - $601 billion
FY 1982 - $618 billion
FY 1981 - $599 billion
FY 1980 - $517 billion

https://www.thebalance.com/current-u...evenue-3305762

Republicans' sacred love of military spending has always undermined whatever program/policy they undertook.

Reading comprehension has never been your strong suit. The whole point of the article is that Republicans cut taxes while raising spending somehow believing that the tax cuts will somehow pay for the increased spending (which, of course, it never has), just as they're doing now. From the article:

As president, he signed it into law with the 1981 Economic Recovery Tax Act, which pushed through a 25 percent reduction in the marginal tax rate for individuals over three years. At the same time, Reagan spearheaded a massive military buildup that skyrocketed defense spending...

President George W. Bush showed that his father’s breed of Republicanism was out: Aided by a Republican Congress, he undid this balanced budget, passing two huge tax cuts despite starting two expensive wars. On top of it all, he also added a costly new prescription drug benefit to Medicare. He did so with fairly little conservative opposition: With a Republican back in the White House, deficits took a back seat to tax cutting and defense spending.

Careful bandying all those facts about. You’ll confuse old Whell. ;)

Today's budget calls for the same. Tax cuts done deal. Raise military spending for a war that will never be fought. And of course, cuts to safety nets. History shall repeat itself. Go for broke, cry poverty and then cut spending for the poor and the elderly.

Simply cannot understand why people vote Republican on the promise of small government (not), balanced budget (never). Never ever happens.

As usual, being a smarmy little runt IS your strong suit, while continuing to quote an article that omits essential facts. Let me help you.

1) When it suits you, you like to forget that a budget is balanced when revenue and income are (since we're talking government here, we'll just use the term) roughly equal. What that means is that spending, the increase or reduction of which, can be just as much a variable as revenue. Revenue was rising during Reagan's tenure, so you can't suggest that a tax cut produced a revenue reduction in the face of spending growth. In fact, while the Budgets submitted by the White House at that time DID call for increased spending in some areas but also called for reductions in others. Its the latter part that typically failed to materialize, as pointed out above, but as you likely failed to understand.

2) Bush started two wars? LOL This rather conveniently omits the fact that the United States was attacked on 9/11/2001. In also omits the fact that there was a significant reduction in military spending that started at the end of Bush 1 and continued by Clinton. So, yeah, there was a need to jump military spending. That same 9/11 attack also set off a number of unforseen events that softened the US economy that was still reeling a bit from the burst of the "dot.com bubble" at the end of 2000. There was also bi-partisan support for the Bush tax cuts, from EGTRA to the Economic Stimulus Act of 2008 which Nancy Pelosi authored and Bush 2 signed.

A budget balances when revenue and income are equal? Who knew? (Revenue is income, dimwit.) Though this may be news to you supply-siders, a budget balances when revenue and spending are equal. Acccordingly, when you depend on tax cuts to generate revenue (the fundamental and flawed premise of supply-side economics) while increasing spending, the budget goes out of whack. WTF do you think happened in Oklahoma and Kansas when their Governors went all-in on supply-side economics?

Now, in actuality, what you have is Trump trying to do what Reagan couldn't.

https://www.politico.com/story/2018/...rograms-403636

The budget again reflects Trump’s businessman-like commitment to shrinking the federal bureaucracy, for the first time making public the White House’s plans for trimming staff and operations across the federal government.

Those “workforce reduction” plans — which rely on hiring freezes, buyouts and stripping protections that make it easier to fire workers — are the result of nearly a year of back-and-forth between OMB and agencies. Some departments, like Education, have already starting giving workers incentives to leave, while the Agriculture Department has made clear it will only be reorganizing, not cutting employees.

Also this:

To help pay for it, Trump’s budget office has requested scraping more from other social programs, like food stamps, and proposing changes to Medicare.

The federal health program is one of the fastest-growing drivers of the national debt. To help stem that rise, Trump’s budget proposes a slew of vague reforms including improvements to “drug pricing and payment policies” and “government-imposed provider burdens.”

Last year, Medicare was mentioned just 10 times in Trump’s budget. This year, the program is mentioned more than 100 times.

I think this is the right approach. Entitlement programs - along with most every other area of the gov't budget - grows every year. Does it make sense to think that we'll still need the same level of fund for these programs in the face of low unemployment and rising wages? I think not.

Of course, even suggesting this will make the left scream like stuck pigs.

Sorry, my bad. Mean this to read revenue and "spending". What follows in that paragraph supports this.

He's doing exactly what Reagan did - radically increasing the national debt. In Trump's case, the deficit will be ~$1 trillion a year over the next decade. At least Reagan did it during tough economic times (the right time for deficit spending, BTW). OTOH, Trump chose to do huge tax cuts and increased spending during strong economic times - the exact wrong time to do it.

BTW, in case you're wondering, Trump's budget proposal is going nowhere and is largely a meaningless document based upon ridiculous assumptions. You sure are easily misled by a con-man and discredited (and an internally contradictory/impossible) GOP economic policy.

Unfortunately, like last year, the budget relies on some extremely rosy economic assumptions and budget gimmicks that inflate its savings and distract from its actual policy reforms. The budget assumes real GDP growth will average around 2.9 percent over the next decade, including a short-term acceleration to as high as 3.2 percent in the next few years. This is much higher than other mainstream economic forecasts project and strains credulity, especially if interest rates and inflation also remain under control, as the budget predicts they will.

The budget also retains a number of policies from last year that are unlikely to generate the substantial savings it claims they would, such as $151 billion from reducing improper payments and $48 billion from testing return-to-work strategies for Disability Insurance beneficiaries.

Furthermore, the budget calls for an unrealistic 40 percent reduction in non-defense discretionary spending by 2028 – despite a lack of specificity as to where much of the funds will come from and despite the fact that the recent Bipartisan Budget Act of 2018 called for an increase in non-defense discretionary spending of over 10 percent.

http://www.crfb.org/blogs/overview-p...fy-2019-budget

That's assuming low economic growth, no spending controls and a tax base that doesn't get wider. That's not what's happening, though.

Just like your dire assessment last week that Trump's tax cut caused a "1000 point drop in the Dow" (the Dow has erased 1/2 of those losses in the last two days and will continue its upward trend because the long term outlook for continued growth is positive), you're demonstrating your understanding of the economy is limited to Dem talking points.

WASHINGTON (Reuters) - As the U.S. Congress limps toward the likely passage next week of another stopgap spending bill to avert a government shutdown, a Washington think tank has estimated the federal budget deficit is on track to blow through $1 trillion in 2019.

If it does, it would be the first time since 2012 the U.S. economy will have to support a deficit so large, highlighting a basic shift for the Republican Party, which has traditionally prided itself on fiscal conservatism.

The Committee for a Responsible Federal Budget, a Washington fiscal watchdog, said the red ink may rise in fiscal 2019 to $1.12 trillion. If current policies continue, it said, the deficit could top a record-setting $2 trillion by 2027.

https://www.reuters.com/article/us-u...-idUSKBN1FI2P2

These aren't Dem talking points, dimwit. Trump's own Treasury Dept just announced that it will need to borrow $3 trillion in the next 3 years.

https://www.cnbc.com/2018/02/05/trea...re-beyond.html

I guess you simply like being lied to by supply-siders who have never once been proven right.

Weak sauce, Mike.

Leave it to you to suggest that the truth is "weak".

Really? The Treasury increased its borrowing - according to the CBO anyway - because projections for tax revenue are down due to the tax cut. Does anyone really think that tax revenue will be lower in 2018 than it was in 2017? Really?

Your CRFB post about the budget suggested that Trump's budget projected a 2.9% GDP growth and that projection was "rosy" and "strained credulity" because other "mainstream" organizations projections were much lower. LOL!! As I recently posted, the Conference Board was projecting 2.9%, and they're pretty damn mainstream. Even the New York Fed recently bumped up their projection to 2.75% recently. Is that "much lower" than 2.9%? I also suspect they'll bump it up some more later this year.

You can believe whatever you want, Finn. You have a gift for ignoring strong evidence to the contrary. :rolleyes:

Your parroting of discredited GOP supply-side dogma and Trump budget sophistry is "truth?" Who knew?

Right. It's funny that in all of your interactions here where you've lost the argument, you resort to lying and invective.
Carry on, dude. It's comical to watch you flail about.

Speaking of things that are "factually challenged," the increase from 81 to 82 was not very dramatic, and OH LOOK, there's actually a DECREASE from 82 to 83!

Truth is kind of low on the list of things you care about, isn't it whell?

Not only that, Whell conveniently fails to mention that Reagan also significantly raised taxes after deficits ballooned following his tax cut:

After Reagan's first year in office, the annual deficit was 2.6% of gross domestic product. But it hit a high of 6% in 1983, stayed in the 5% range for the next three years, and fell to 3.1% by 1988...

So, despite his public opposition to higher taxes, Reagan ended up signing off on several measures intended to raise more revenue.

"Reagan was certainly a tax cutter legislatively, emotionally and ideologically. But for a variety of political reasons, it was hard for him to ignore the cost of his tax cuts," said tax historian Joseph Thorndike.

Two bills passed in 1982 and 1984 together "constituted the biggest tax increase ever enacted during peacetime."

http://money.cnn.com/2010/09/08/news...axes/index.htm

Yes he did. Net effect was lower taxes on the rich, paid for by the middle class and the working poor, who's FICA and Medicaid taxes increased sharply.

Uh, no.


Top rate on regular income when Reagan took office was over 69%. When he left, it was 28%. Capital gains - you know, that tax that the rich guys pay :rolleyes: - went from 23.7% in 1980 to 28% when he left.

Uh, no.

http://www.politifact.com/virginia/s...-taxes-during/

Increases on Social Security and Medicare were largely on higher wage earners. However:

Some of the increases were modest in scope. And it’s important to note that overall U.S. taxes, when measured as a portion of the nation’s GDP, went down during Reagan’s presidency.

Read and learn, Grasshopper.

The Economic Recovery Act of 1981, also known as the Reagan tax cuts, was the biggest reduction in U.S. taxes of the past 70 years, possibly even the biggest ever. That much is reasonably well-known.

What is less well-known is that these cuts were then followed by a series of tax increases that, if you add them all together, were almost as big as or even bigger than the 1981 cuts, depending on the measure you use.

https://www.bloomberg.com/view/artic...s-of-1982-1993

According to a 2003 Treasury study, the tax cuts in the Economic Recovery Tax Act of 1981 resulted in a significant decline in revenue relative to a baseline without the cuts, approximately $111 billion (in 1992 dollars) on average during the first four years after implementation or nearly 3% GDP annually.

During Reagan's presidency, the national debt grew from $997 billion in FY1981 to $2.85 trillion in FY1989. This led to the U.S. moving from the world's largest international creditor to the world's largest debtor nation. Reagan described the new debt as the "greatest disappointment" of his presidency.

https://en.wikipedia.org/wiki/Reagan...t_expenditures

The bottom line is that supply-side economics has never once delivered what conservatives have promised - that tax cuts pay for themselves and that tax cuts for the wealthy equally benefit the poor. There's no question that tax cuts and/or spending (both are considered tax expenditures by economists, BTW) can stimulate the economy. However, there's also no question that they add to the deficit when financed with debt. Republicans have sold gullible ideologues (i.e., people like you) the notion that that you can simultaneously reduce taxes and pay for additional spending by revenue generated by tax cuts. It's sophistry, plain and simple regardless of how appealing the idea of a free lunch is.

Of course, one month does not a trend make, but OOOPS! We ran a SURPLUS in January.

https://www.fiscal.treasury.gov/fsre...mt/mts0118.pdf

You do realize that you're mixing apples and oranges here, don't you? I'm talking about income tax rates on earnings. The the Tax Reform Act of 1986 changes actually did some things that liberals wanted, such as closing come loopholes favored by "the rich". That's why it was a tax law sponsored by Dems. What the TRA really was, IMHO, was a deal with the devil. Reagan wanted further tax law simplification and made a bipartisan deal with the Dems to get it. In typical lefty fashion, that law is now used like an albatross to hang around Reagan's neck. :rolleyes:

Except that no one is saying that. There you go, arguing with yourself again.

BS. That's exactly what supply-side dogma is. Moreover, you said much the same thing in support of the $1.5 trillion tax cut.

No, I didn't. That was you putting words in my mouth. I guess you're starting to believe your own bullshit. :rolleyes:

Go back and look at post 9 in this thread. There will need to be spending reductions. Trump is attempting to do what Reagan could not in obtaining these spending reductions. I've said that same thing in this forum in many threads. In fact, it has been YOU arguing in many threads that spending reductions are not possible. :rolleyes:

We will need spending reductions, and such reductions are long overdue.

Reagan and Graham-Rudman cut taxes on the backs of military dependents and retirees by renegening on contracted benefits.
I do not understand this love affair the military has with the Repub's and him. One of the reasons I don't vote for them.
It seems iirc the Dem's never tried to do that crap on us.

That tax cuts shit is working so well in Kansas, let's put the country in the same condition, cash out, and skip town. Why not, horray for us, fuck all you losers.

When the Repubes finally do cripple Medicare, you’re 80 and there’s no safety net to help cover your mounting medical costs, maybe you’ll finally wake up. You’re not terribly bright, so I have my doubts.

Your boy, Lying Donnie Dotard, just signed a budget bill that increased spending for social programs and then released a budget that does the exact opposite. In any event, if you knew anything about how Washington works (and you don't), you'd realize Trump's budget proposal is DOA, just as his budget proposal from last year was. Moreover, the deal he struck last week increases DoD funding beyond what Trump even wanted and his new budget proposal greatly increases defense spending. How's that for spending reductions?

Your Dear Leader made a campaign promise to eliminate the national debt in 8 years and now his own Treasury plans to borrow $1 trillion per year for the next 3 years and independent estimates show his budget will result in annual deficits of ~$2 trillion per year within 10 years.

As for me putting words in your mouth, you've been singing the praises of supply-side economics for months, repeating the ridiculous myth that tax cuts pay for themselves. Do you wish to renounce your previous defense of supply-side economics now that you see what a Republican President, House and Senate are doing to the deficit by their implementation of this discredited dogma?

So did Obama, Bush 2, Clinton, Bush 1.....etc. Show me a Prez budget that has ever been adopted. The budgets are a framework for discussions but will never be passed as is and everyone knows it....well, except for you I guess. :rolleyes:

I've been singling the praises of the current round of tax reductions because they are necessary. You throw around terms like "supply side economics" but the definition has been corrupted and used out of context, and folks like you likely get it wrong on purpose just so you can turn the idea into a straw dog that you can kick around.

"Supply side economics" was a theory SOME of what was done in the Reagan era. However, to say that "Reaganomics" = supply side economics is sophistry. But that's exactly what you and your WaPo drivel in the OP is trying to convey.

So, either you and WaPo don't know what the hell you're talking about or you're being a lying sack of crap. Doesn't matter to me which one it is.

This doesn't square with your several comments about how Trump is attempting to reduce spending. I'd call it very charitable to characterize his ridiculous budget proposal as a serious attempt at anything...

The rest of your post is simply bullshit. Huge tax cuts are needed in a robust economy, that despite its robustness, is still running huge deficits? You're a complete idiot when it comes to matters economic.

I remember when Obama was President Whell was a big deficit hawk 'round these parts.
What happened?

He's now become a full-blown Trump sycophant, defending every idiotic thing that his Dear Leader does.

Sure it does, if you're not suffering from near-sightedness. The book on whether there will or will not be significant budget reductions hasn't been written yet. Hell, VOX is freaking out about "shocking cuts" in the recent budget proposal, but even Vox can figure out that a lot of what's in the budget proposal isn't going to become reality.

Yeah, your fellow travels in the mainstream press are screaming about this, but let 'em scream. Hell, I encourage them to scream. Its awesome to hear the left scream about budget deficits, even if they only do it when a Repub is in office. :rolleyes: I'll be more interested to see what comes out of Congress over the next few months. I suspect there will be some compromises about the Dreamer issue, which will allow the Dems to not bitch too much about budget reductions. But I strongly suspect there will be substantive proposals for budget reductions forthcoming. And if there aren't, I'll be right there screaming with you, Finn....just without the girly voice. :p

I guessed you missed the fact that the Senate, House and Trump signed a 2-year budget deal adding $400 billion in spending. There won't be any substantive budget reductions forthcoming, particularly not the idiotic drivel in Trump's budget proposal. It's DOA. Period.

As for the $1.5 trillion tax cut, you cannot find a single reputable economist who supports it. All agree that it is exactly the wrong thing to do at this time. Corporate tax reform? Certainly. $1.5 trillion in unfinanced tax cuts? Completely idiotic at this point in the business cycle.

There you go projecting again...:rolleyes: