Editore"s Note
Tilting at Windmills

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September 5, 2007
By: Kevin Drum

LOONY SUPPLY-SIDERS....Does the Atlantic pay its bloggers by the post? They sure do burn up the pixels over there. Now that there are six of them, I conservatively estimate a combined output of approximately a brazillion words a day. (You all know what a brazillion is, right?)

Anyway, over at the Atlantic Megan McArdle has not one, but two posts about Jon Chait's book The Big Con today, and the second one begins with this odd claim:

I'm diving into Jonathan Chait's piece in The New Republic [based on the book –ed] on how a whole huge conspiracy of crazy supply-siders has taken over the Republican party. This is, to put it kindly, wildly overblown. I mean, I'm all for someone taking on the sillier kind of supply siders who fanny about claiming that tax cuts increase tax revenue, but they've been rather thin on the ground lately....Chait tars all tax-cutters with the ideas of the looniest supply siders. One can believe that tax cuts, by reducing deadweight loss and/or providing fiscal stimulus, will be good for the economy, without necessarily believing that the economy will be crippled by a 5% rate increase.

Well, yes, one can believe that. The problem, as Chait says, is that virtually no one in the Republican Party does believe it. George Bush doesn't believe it. Dick Cheney doesn't believe it. Newt Gingrich and Dick Armey and Tom DeLay didn't believe it. And judging by the astonishing pander-fest that takes place whenever taxes are mentioned in one of the Republican debates, not a single one of the Republican presidential candidate believes it.

And then there's the Wall Street Journal editorial page, which routinely suggests the nation will collapse if taxes are raised. There's the Club for Growth, ditto, plus Rush Limbaugh and his clone army. And there's Grover Norquist's tax pledge, signed by virtually every single GOP member of the House and Senate. As I said in my review of The Big Con:

There are, it's true, a few honest supply-siders who are careful about what they say: namely that some tax cuts, under some circumstances, if they're matched by spending cuts, can modestly stimulate economic growth and pay for about half their cost in the very long term. But it was never sold this way, and more than a decade ago it lost even its original tenuous groundings in reality. Instead, it's become little more than a carnival barker's cure-all: Cut taxes and the economy will boom! There isn't a practicing economist in the country who believes this, but that hasn't stopped Republican primaries from becoming virtual meat markets where the candidates vie to outbid each other over their fealty to tax cuts today, tax cuts tomorrow, tax cuts forever.

The proposition that tax cuts are the answer to all problems and that tax increases are little more than naked invitations to economic disaster is, as near as I can tell, almost universally accepted by Republican politicians and conservative think tanks. Even ur-supply-sider Bruce Bartlett has gotten fed up with it. I'd call this loony supply sidism, and far from being thin on the ground, I'd say it continues to have a stranglehold on conservative discourse. Anybody want to seriously argue this?

Kevin Drum 5:59 PM Permalink | Trackbacks | Comments (32)

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Comments

Ha, you've got to be joking. The war on the middle class is long over. It was a complete massacre. The few survivors are moving to Canada.

Posted by: Talphon on September 5, 2007 at 6:10 PM | PERMALINK

"Anyone want to seriously argue this?"

Not I. I well remember the screechings when Clinton's mild tax hike was proposed. National Review did a cover story by Paul Craig Roberts, "How to Grow the Deficit". Forbes magazine announced that Clinton was about to trigger a major recession and urged investors to move their money out of the US and into the safe harbor of -- you guessed it -- Japan. Ms. McArdle is indeed attributing to the Lafferites a degree of sane restraint which they weren't close to possessing.

Paul Krugman makes this same point in his essay on the subject in "The Accidental Theorist". This, by the way, is the book that introduced him to me -- years before he declared war on Bush as the latter declared war on sanity -- and it should be required reading for anyone who actually regards Krugman as an extreme leftist, since he spends a very large part of it bashing the likes of Nader, Robert Reich and William Greider (the "accidental theorist" of the title, who according to Krugman ends up proving the opposite of what he intended).

Posted by: BruceMoomaw on September 5, 2007 at 6:11 PM | PERMALINK

If it helps the very very rich, it must be right.

QED.

Posted by: Gore/Edwards 08 on September 5, 2007 at 6:11 PM | PERMALINK

Surely McArdle has a point -- Chait's critique would have been far more interesting, two, five, ten, twenty years ago. Right now it just doesn't sound that interesting. Everybody knows that taxes are going to go up, and the wind is no longer in the supply siders' sails.

Posted by: Martin on September 5, 2007 at 6:12 PM | PERMALINK

Martin: You know, I agree with you, but have you watched any of the Republican debates? If the wind is no longer in the supply siders' sails, somebody forgot to tell every single one of the candidates. Unfortunately, the fight against loony-bin-ism is still indispensable.

Posted by: Kevin Drum on September 5, 2007 at 6:19 PM | PERMALINK

Similarly, one could question affirmative action without being a KKK member, or support school vouchers without desiring the destruction of the American school system, but don't try those kind of things at a Democratic candidates' debate. If the claim is being made that one party is more doctrinnaire and knee-jerk than the other, I don't believe that.

Posted by: sean on September 5, 2007 at 6:20 PM | PERMALINK

Have you guys every heard the saying that nobody ever went broke overestimating the stupidity of the American buyer?

Same thing with the tax-cuts "carnival bark." (Great term for it BTW) The average Republican voter goes for it thinking that if it passes yes it might cause trouble for some pieces but not him. He keeps more of his "hard earned without no help from no one" cash and that's all he sees.

So they will continue barking, because it works.

Posted by: Alan on September 5, 2007 at 6:21 PM | PERMALINK

I recall that they gave the drug industry tax amnesty uder the guise that this would create jobs.

Drug makers were the biggest beneficiaries of a tax amnesty two years ago when they moved $100 billion in foreign countries back to the United States, ...
www.chapelhillnews.com/opinion/guest_columns/story/9045.html

And Grover Norquist constantly wails for smaller government, did that happen? Why of course not, it has grown, by some accounts, by 35%.

And then again alot of these tax-cuts, and so I hear,are backloaded and will come due after George safely parachutes from office.

Posted by: Ya Know..... on September 5, 2007 at 6:25 PM | PERMALINK

But then we all know that the Republican Party lives in an alternate reality...

Posted by: mfw13 on September 5, 2007 at 6:34 PM | PERMALINK

Supply-side is to economics is to economics as intelligent design is to evolution. It makes no sense, has no base verification and yet is widely believed in spite of overwhelming evidence it is hooey.

Posted by: Mudge on September 5, 2007 at 6:35 PM | PERMALINK

And about this Free Market myth...correct me if I am wrong, but hasn't the sub-prime crunch gone to show that "Free Markets" aint so free with the hundred of billions in bailout money injected into the market to kee it liquid?
[Like the PPT [Plunge Protection Team]]

Ginnie Mae, Freddie Mac, [The mortgage securitisation game] guaranty the investor will get his payments.

Yeh I know the drill: economic security is national security. But so are jobs that are being outsurced. Sure the Yen is at a twenty year low, And China is Americas biggest creditor, but I dont live in China. They have brought people out of poverty while Coporate America is sending people into poverty. Not very patriotic these guys.
[One day this bottom line buffonery will choke itself to near death and ya know that worries me being a working class American slob]

Posted by: Ya Know..... on September 5, 2007 at 6:37 PM | PERMALINK

Oh nice, McMegan busted out her patented "One can believe" line. She uses it about once a day. She is truly awful. Maybe Yglesias could hide her keyboard one day?

Posted by: Steve Balboni on September 5, 2007 at 6:38 PM | PERMALINK

The problem with Chait's book, at least in the excerpts I've read, is that he's, well, a tenth as overblown as the Wall Street Journal. He claims that American politics have been "hijacked by a tiny coterie" of supply-siders. Over the past 25 years, thousands of Republicans have won election at the federal, state, and local level running as tax cutters. It's not a coterie. About half the American electorate is very susceptible to any promises of tax cuts. Remember that Bill Clinton promised a middle-class tax cut when he was running in 1992. He didn't deliver, of course, but that's what he promised. Every successful presidential candidate of the past 25 years has started out with promises of tax cuts.

Have the Republican cuts generated a massive "shortfall"? Yes, but Americans don't give a damn about that. The economic stasis of the past seven years, plus the currently stumbling stock market, does open up an opportunity for Democrats. But the last time I looked, they were subsidizing millionaires via the farm bill, plus searching for ways to repeal the "alternative minimum" tax before it starts to reach the "middle class" -- you know, the people making $250,000 a year. The dream of people like Chait, and yourself, it seems, that we're going to raise taxes to give health insurance to those who don't have it, is a political non-starter, in my opinion.

Posted by: Alan Vanneman on September 5, 2007 at 7:23 PM | PERMALINK

A better question is: "Are there any serious thinkers left in the Republican party?"

And once you see it written out, you know the answer.

Posted by: craigie on September 5, 2007 at 7:24 PM | PERMALINK

don't tell me:
mccardle says a bunch of stupid, probably dishonest things in order to carry water for the republican leadership.
again.
jesus, is she despicable.
she must be a hell of a nice person, in person, because in print she's a disgrace.

Posted by: kid bitzer on September 5, 2007 at 7:38 PM | PERMALINK

McArdle's blog only survives because the other bloggers at The Atlantic are constantly pimping her tripe. Damn tripe pimpers.

Posted by: Orson on September 5, 2007 at 7:54 PM | PERMALINK

One of the biggest problems with tax-cut mania is, supporters treat government expenditures as must money up in smoke. They have trouble thinking, that money spent on repairing infrastructure will prevent further expenses later, that having FDA or IRS inspectors will prevent E Coli attacks or collect delinquent revenue, etc.

Posted by: Neil B. on September 5, 2007 at 9:08 PM | PERMALINK

Yglesias ( http://matthewyglesias.theatlantic.com/archives/2007/09/the_relevance_of_supplysiders.php )has just printed a truly impressive rogues' gallery of "crazy supply-siders", as verified by detailed quotes from each of them -- including nt only Cheney (as agreed to by McArdle), but also Bush himself, Ari Fleischer, Tony Snow, Tom Delay, Sen. Sununu, Giuliani, McCain, the Wall St. Journal, the Weekly Standard, the Heritage Foundation, and Larry Kudlow's TV show. Last but not least, he quotes Greg Mankiw (not noted for his leftism) on the subject of McCain: "Fealty to the most extreme supply-side views is de rigeur in some segments of the Republican party" -- which, as Yglesias' list shows, happen to include ALL of its most currently prominent figures.

Some of these characters no doubt truly believe in it. Others are simply publicly backing it either because they're politicians hoping to gain a leg up with the eternal appeal of the something-for-nothing offer, or because (like Stockman, Irving Kristol, or -- dare we mention it? -- Andrew Sullivan a few years ago), they think that it's a useful lie for the purposes of bamboozling voters who would otherwise never support GOP policies into doing so.

Posted by: Bruce Moomaw on September 5, 2007 at 9:16 PM | PERMALINK

One thing a Republican will never countenance is to pay an extra dollar in taxes to support our troops.

Posted by: Fidelio on September 5, 2007 at 9:24 PM | PERMALINK

Some of these comments, as well as much of what Chait writes in his book go too far. Just ask yourself whether you would like to go back to the tax and economic policies of the Carter Administration--a top income tax rate of 70%, inflation and unemployment both rising sharply, workers refusing overtime to avoid being pushed into higher tax brackets and so on. The answer, of course, is "no." I think it is revealing that when Bill Clinton raised the top rate in 1993, he stopped at 40%. Ronald Reagan only reduced the top rate to 50% in 1981 because opposition for doing more was so strong among Democrats. Yet a little more than 10 years later, a Democratic Congress and a Democratic president conceded that 40% is as high as we should go. This is what I was trying to get at in my New York Times article that Kevin linked to. It shows the extent to which sensible supply-side policies are generally accepted.

Posted by: Bruce Bartlett on September 5, 2007 at 9:45 PM | PERMALINK

Chait writes, McArdle comments.

Dumb and Dumber.

Posted by: milo on September 5, 2007 at 9:50 PM | PERMALINK

Ah, yessss, "workers refusing overtime to avoid being pushed into higher tax brackets".

First we had Dumb and Dumber.

Now we have Dumberer.

Look it up Bartlett, it's under apocryphal

Posted by: milo on September 5, 2007 at 9:53 PM | PERMALINK

Mr. Bartlett:

Please, don't presume. There are certainly conditions under which many of us would accept tax increases. Probably single-payer insurance would draw considerable interest. The replenishment of Medicare funds might be another. More fruitful education programs could possibly be of interest. I am sure there are many other reasons that we would happily pay more to get more and better, provided our government was honest and considerate of our interests. (And could quit lying long enough to convince us that they cared!)

The situation under Mr. Carter had nothing to do with higher, more progressive tax brackets in this country. Being pushed into a higher bracket via greater earnings is just an emotional ploy, a dog that never hunted. I believe that tax brackets were higher and far more progressive under administrations from 1945 through the early 1970s and those seemed to have been our boom times.

And no. I doubt that many sober economists have ever accepted that supply side economics or Says Law ever made any sense at all.

Posted by: shadou on September 5, 2007 at 11:25 PM | PERMALINK

"It shows the extent to which sensible supply-side policies are generally accepted."

No, it shows the political pendulum swinging. Those same legislators were also sensibly deregulating savings and loans before the S&L crisis, and sensibly deregulating the auditing firms before the Enron collapse, at least that's what an ideological economic rightist would have said at the time.

The top marginal income tax rate was above 70% from 1932 to 1980. So how bout we go back to the policies of the 'golden era' of 1945 to 1973, which included top marginal rates of 70% or higher?

I can cherry pick a low top marginal rate year for you to "support" my argument: the top marginal income tax rate was 25% in 1931!

Posted by: jefff on September 5, 2007 at 11:25 PM | PERMALINK

Well, I see that every substantive comment is already played out. Even milo beat me to the urban legend that Bartlett is pedaling.

So all I have to ask is, wtf does "fanny about" mean? And is that using the USAmerican or the Brit def of "fanny"?

Posted by: Disputo on September 5, 2007 at 11:28 PM | PERMALINK

"The top marginal income tax rate was above 70% from 1932 to 1980..."

Oops, make that 1936 to 1980. From 1932 to 1935 it was 63%.

Posted by: jefff on September 5, 2007 at 11:29 PM | PERMALINK

Supply siders are not really conservative, but Reagan Democrats.

It's all about the great appeal of feeding at the public trough. The libs used to have all the welfare people, but Reagan lured them away with a new way of feeding at the public trough--not paying taxes in the first place. No wonder Democrats flocked to his support. One has to be suspicious of a man who was a fervent support of FDR in his youth.

That's the difference between a true conservative like Goldwater and the new borrow and spend "?conservatives?" like Bush. Luring the taxpayer with candy.

Posted by: Luther on September 6, 2007 at 1:03 AM | PERMALINK

An intellectually dishonest straw man argument from "Jane Galet"? You don't say...

Posted by: Gregory on September 6, 2007 at 9:27 AM | PERMALINK

Megan McCardle is either incredibly stupid or incredibly dishonest or, most likely, both. In any case, she is certainly not credible.

She also had the temerity to take on Paul Krugman the other day. LOL.

Posted by: Junius Brutus on September 6, 2007 at 10:49 AM | PERMALINK

If the claim is being made that one party is more doctrinnaire and knee-jerk than the other, I don't believe that.
Posted by: sean on September 5, 2007 at 6:20 PM | PERMALINK

Then you haven't been paying attention.
I'm getting really tired of this moral relativism. It's disturbing to think that one of Americas two parties has jumped the shark, but look at the damn evidence. Is that too much to aks?

Posted by: Northern Observer on September 6, 2007 at 11:46 AM | PERMALINK

I still remember Texas Congressman Bill Archer responding to the mild Clinton tax increases, stating that the economic recovery would screech to a halt and the deficit would explode. How could he possibly have been more wrong? In fact the economy took off and the deficit disappeared.

Posted by: fafner1 on September 6, 2007 at 11:59 AM | PERMALINK
Supply siders are not really conservative, but Reagan Democrats..... Luther at 1:03 AM

Here are some Supply-Siders who maintain that lower taxes increase revenues
....include, among many others, George W. Bush, Dick Cheney, Rudy Giuliani, John McCain, AND most of the leading conservative think-tanks and publications. (Matt did not mention Fred Thompson and Mitt Romney, who also have made this claim.)...
These guys sound like a conservative bunch. Not only is there not a Raygun Democrat, there's not a Democrat among 'em.

Posted by: Mike on September 6, 2007 at 12:58 PM | PERMALINK




 

 

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