Editore"s Note
Tilting at Windmills

Email Newsletter icon, E-mail Newsletter icon, Email List icon, E-mail List icon Sign up for Free News & Updates

July 13, 2010

FIORINA AND THE TAX FAIRY.... I'm beginning to better understand why, after a scandal-plagued tenure, HP fired its beleaguered CEO, Carly Fiorina.

Fiorina, who decided to parlay her professional failures into becoming the Republican candidate for the U.S. Senate in California, talked to a the CBS affiliate in San Francisco this week about her approach to tax cuts.

"Let me propose something that may seem crazy to you: you don't need to pay for tax cuts. They pay for themselves, if they are targeted, because they create jobs."

This is, in most respects, even more ridiculous than Sen. Jon Kyl's (R-Ariz.) assertion that shouldn't try to pay for tax cuts. For the Senate Minority Whip, tax cuts are always good, even if they increase the deficit, because they shrink government. For the deeply confused Carly Fiorina, the policy is more fantastical -- paying for tax cuts is unnecessary because once taxes are cut, more money simply materializes, magically, in the federal treasury. The deficit simply won't go up, she argues, no matter how much taxes are cut.

Thirty years ago, this raving stupidity had a name: "voodoo economics." More recently, it's come to be known as belief in the "Tax Fairy."

Regardless of the name, the notion that tax cuts necessarily pay for themselves is one of the more pernicious lies in the far-right arsenal. It's both gibberish and right-wing propaganda, but it's nevertheless repeated from time to time.

It shouldn't be -- the concept has been debunked repeatedly by those who care about reality. How wrong is the argument? The Bush/Cheney Office of Management and Budget and the Bush/Cheney Council of Economic Advisers rejected the notion that tax cuts can pay for themselves out of hand. Fiorina, in other words, is promising to be even more fiscally irresponsible than the bunch that added $5 trillion to our national debt in eight years.

Even a fired CEO should be able to understand the reality here. The single biggest cause of the current deficit is Bush's tax cuts. They didn't "pay for themselves"; they put us in a devastating hole.

In the same interview, by the way, Carly Fiorina said the Senate "doesn't have enough people who understand how the economy works." She didn't appear to be kidding, but coming from her, it was laughable.

Steve Benen 2:25 PM Permalink | Trackbacks | Comments (32)

Bookmark and Share
 
Comments

Why is Boxer behind?

Posted by: Ron Byers on July 13, 2010 at 2:38 PM | PERMALINK

Americans will always choose the pol who offers the lie that's more pleasant to believe. That's why Fiorina is ahead.

Posted by: JMG on July 13, 2010 at 2:41 PM | PERMALINK

Why are Geithner and Wrangel still around?

Posted by: ? on July 13, 2010 at 3:02 PM | PERMALINK

NOW would be an excellent time for Obama to announce a plan to put this nation back on its feet. He should take up the lunacy of Fiorina's claim and point out that by the end of Shrub's reign, huge tax cuts were in place that had the effect of the rich accumulating unprecedented piles of wealth while the rest of us were experiencing 3/4 million jobs losses a month. Obama should say this idea was tried and failed miserably. That Bush Senior called this nonsense Voodoo Economics and he was proven correct. Then Obama should propose to keep those cuts in place for 2 more years provided the bill is amended to apply to those with incomes less than $250k, per household and explain that the thinking is those who get the break will plow the windfall back into the economy creating demand for products followed by jobs to fill the demand. Maybe there's some way to provide tax credits on big ticket purchases that come with a certificate of manufacture here in the USA producing a similar effect to trade tariffs.

Posted by: Chopin on July 13, 2010 at 3:04 PM | PERMALINK

When it comes to taxes and the deficit, remember the adage:

When you find yourself in a hole, STOP DIGGING!

Cutting taxes deepens the hole, so why the blazes would anyone think it makes things better? -- Oh, right! These are Republicans we're speaking of here. Never ones to pay for what they get, they make a fetish out of stiffing the people.

No wonder HP fired her. She did the same to the corporation as she wants to do to the country.

Idiocy, thy initials are G.O.P. Or, these days, G.O.B.P., as they say.

Ed

Posted by: ed drone on July 13, 2010 at 3:04 PM | PERMALINK

It's good to see R's following Boehner's lead and lining up behind this nonsense - it should be easy to discredit them once and for all.

But do we have any D's who *want* to discredit R's and put them out of our misery? Let's see who steps up to the plate, and who retreats to the neo-Hooverite background.

Posted by: ElegantFowl on July 13, 2010 at 3:07 PM | PERMALINK

"Cutting taxes deepens the hole..."

Like spending. But Barack Obama (GS) keeps it up. So do other Sach's employees.

Posted by: Shovel on July 13, 2010 at 3:11 PM | PERMALINK

First of all Obama isn't raising taxes. The Bush tax cuts sunset at the end of this year. Any extension is a further tax cut.

There is no policy justification for lowering taxes for folks making more than $250,000 per year. The Bush tax cuts were sold on the promise that the wealthy would use the money to invest here at home and they would result in a new golden age for America. That hasn't turned out to be true. The experiment is over.

Don't let the Republicans claim Obama is raising taxes for anyone. He isn't.

Posted by: Ron Byers on July 13, 2010 at 3:18 PM | PERMALINK

"nevertheless repeated from time to time."

You misspelled "endlessly."

Posted by: demisod on July 13, 2010 at 3:19 PM | PERMALINK

Boxer endorsed Lieberman in 2006, so maybe Holy Joe will return the favor and endorse her. I'm not really sure who that would help though.

Posted by: Fleas correct the era on July 13, 2010 at 3:21 PM | PERMALINK

I'm not at all surprised at this. Haven't you read about the Laffer curve? And the "invisible hand?"

These idiots have been believing in economic magic for years and there are just tons of them that continue to believe even when we can see with our own eyes what BS it is.

Posted by: Kewalo on July 13, 2010 at 3:35 PM | PERMALINK

Aside from the "pay for themselves" idiocy that everyone's decimated, there's the "because they create jobs" fallacy, which, along with the increased revenue bullshit, the supply siders and other cons have made into conventional wisdom. But right now the problem isn't money supply -- banks and corporations are sitting on oceans of cash -- it's a lack of will to invest when demand has tanked. Infusing wealthy people with even more millions will just bring back the 80's and the 2000's, when Reagan and Bush cut their taxes and then essentially borrowed it right back from them.

Posted by: R. Porrofatto on July 13, 2010 at 3:46 PM | PERMALINK

Carly Fiorina said the Senate "doesn't have enough people who understand how the economy works."

So voting for Carly would make make the Senate even less credible. Got it. I guess the days of electing hollywood types is drawing to a close in Kalifornia.

Posted by: Kevin (not the famous one) on July 13, 2010 at 3:48 PM | PERMALINK

This is great coming from a former CEO. Every time some idiot makes this claim, the response needs to be, "Well, then, if businesses would continually cut prices on all the goods and services they sell, those businesses will reap larger profits, right? RIGHT?!?"

Posted by: TRNC on July 13, 2010 at 3:54 PM | PERMALINK

IT folks hate this Fiorina piece of crap. She destroyed HP. There are hundreds of thousands of outsourced, H-1b-Scab-replaced IT workers in CA who will delight in voting against this crap in human form Fiorina. If she is within 10 pts of Babs on Election Day, I will be amazed.

Posted by: POed Lib on July 13, 2010 at 3:55 PM | PERMALINK

I want to know how lowering Taxes will fix the inequality in lifespans between the US #38

and nations like Japan, Cuba, France, etc. all of which have longer lifespans than America.

Everything else can be fixed. But if you are dead, well fixing it does no good.

Posted by: KurtRex1453 on July 13, 2010 at 4:01 PM | PERMALINK

From Chopin's comment:

"That Bush Senior called this nonsense Voodoo Economics and he was proven correct."


Amen to that. Taxes for most of us weren't really cut -- they were just shifted. Case in point: look at most American homeowners' local PROPERTY TAX bills over the last decade.

Posted by: Rich S. on July 13, 2010 at 4:09 PM | PERMALINK

Like spending. But Barack Obama (GS) keeps it up. So do other Sach's employees.

And who cut taxes that were supposed to pay for themselves, along with spending for two wars, medicare prescription drugs, and bailouts? HMMMMMMMMMMMMM? What exactly has Obama spent that he hasn't asked to be paid for? Bailout money supported by just about every Republican? HMMMMMMMMMMMMM? He only spent stimulus money, which about 40%+ was tax cuts that should help defray the cost of the cash spent, according to the republican logic that tax cuts increase revenue.

Posted by: flyonthewall on July 13, 2010 at 4:13 PM | PERMALINK

What Fiorina articulated is basic supply-side economics, which has been around since Reagan.

It's the "trickle down," "voodoo" economic bullshit that's been around for decades, although I have yet to see a concrete example to prove its existence. Perhaps that should be Boxer's first question to Fiorina in a debate (assuming Fiorina has the guts to agree to one).

Posted by: bdop4 on July 13, 2010 at 4:22 PM | PERMALINK

At this point, not many people in California are paying attention and Fiorina can say just about anything without generating questions or interest. Brown has just begun to campaign while “mean girl” Fiorina has been spending money like crazy. Recognition is currently ruling. Remember Brown is an old guy. As a Californian, it’s frustrating to see a lackluster Democratic candidate. He’s basically a do-over. Like Whitman, Fiorina hasn’t been engaged in the political process either which seems to make little difference at this stage in the campaign. Unfortunately, my fellow Californians like magazine cover famous better than qualified. And Brown is way beyond his Linda Ronstadt days ( Linda who?) I’m thinking that Gavin Newsome will give Brown some help in the Lt Governor spot.

Posted by: Diane Rodriguez on July 13, 2010 at 4:26 PM | PERMALINK

It's the whole supply-side economics argument - spurred on by that Laffer curve (was there ever a better name for a right-wing economist).

Yes, there must be at least one optimal tax rate, more than 0% and less than 100% that maximized revenue to the government. So if you are taxing too high, yes, revenues will go up if you decrease them.

But they won't tell you two things. First, if you are taxing too low, then of course, raising taxes will raise revenues. And second, no one can tell you what that exact point is. It changes all the time with the econonmy, with social changes in our society, etc. That's why economics is a Social Science.

But anedoctally - when was the time we last maximized our tax revenues and had a surplus.... Why the Clinton era tax rates of course! Hey, I got a crazy idea... let's try those again.

Posted by: Chris on July 13, 2010 at 4:40 PM | PERMALINK

-And who cut taxes that were supposed to pay for themselves, along with spending for two wars, medicare prescription drugs, and bailouts? HMMMMMMMMMMMMM? What exactly has Obama spent that he hasn't asked to be paid for? Bailout money supported by just about every Republican? HMMMMMMMMMMMMM? He only spent stimulus money, which about 40%+ was tax cuts that should help defray the cost of the cash spent, according to the republican logic that tax cuts increase revenue.-

Awesome response. Pay no attention to the men who work behind the curtain. But UPDodd is a fantastic way to get your package on time! All for less than $1 million...

Posted by: Shovel on July 13, 2010 at 4:43 PM | PERMALINK

Didn't the CBO under Republican control do a study several years ago in which they looked at a variety of supply-side, dynamic response models? I seem to recall that they found that there was little or no evidence that use of tax cuts alone to "stimulate" the economy when in recession paid for themselves over time (read several years).

Go figure

Posted by: David on July 13, 2010 at 4:46 PM | PERMALINK

Didn't the CBO under Republican control do a study several years ago in which they looked at a variety of supply-side, dynamic response models? I seem to recall that they found that there was little or no evidence that use of tax cuts alone to "stimulate" the economy when in recession paid for themselves over time (read several years).

Go figure
-----
Raising taxes put people out of work. Ask Jim Florio.

Posted by: Cape Made on July 13, 2010 at 4:59 PM | PERMALINK

Why do the Teapublicans say its true? Because they think that lower taxes cause rich people to spend more thus businesses hire more thus because the economy grows the gov gets more in taxes.

If This was true, Ethiopia could have elimiminated the famine by feeding the rich more.

Or reducing the interest rates on loans to zero, would accomplish the same thing.

Well, interest rates are close to zero, fed funds, rate and we still have a recession.

Meanwhile what are Teapublicans going to do about the US having a lower life expectancy than Japan, France, Chile and Cuba?

Seriously. Everything else is irrelevant if yoy are dead.


Posted by: KurtRex1453 on July 13, 2010 at 5:43 PM | PERMALINK

Why don't we eliminate all taxes and then spend the resulting infinite income?

Posted by: Antonius on July 13, 2010 at 7:36 PM | PERMALINK

Fiorina is just another curse on California. I see Brown dragging Boxer down with him, so we better get used to Carly.

Posted by: Hazy on July 13, 2010 at 7:50 PM | PERMALINK

in 1993, clinton and the democrats raised taxes. the right-wingers claimed that it would plunge the nation into recession, and admittedly, 7+ years later, after the best post-war growth cycle, we finally had a brief recession.

in 2001 and 2003, bush and the republicans cut taxes. do we need to repeat the outcome?

this doesn't mean that every tax hike leads to phenomenal growth and that every tax cut is pointless, but it does mean that lunatics like carly fiorina don't have the slightest idea of what they are talking about.

Posted by: howard on July 13, 2010 at 7:50 PM | PERMALINK

Sorry, but Boxer is 3 points AHEAD as of last evening.

Posted by: jjm on July 13, 2010 at 8:35 PM | PERMALINK

Carly Fiorina said the Senate "doesn't have enough people who understand how the economy works."

She's dead right, considering the lack of support for another stimulus package. What's laughable is the implication that sending her to the Senate will improve the situation.

Posted by: David Bailey on July 13, 2010 at 8:50 PM | PERMALINK

The Repubs are responsible for over 10 Trillion of the current debt. Reagan started with a federal debt of only 1 Trillion and it was at 5 Trillion when Clinton started. It did rise during his first few years as he corrected Repub policies.
However, in Clinton's last years, there were surpluses that were projected to eliminate the entire Fed debt by about 2010. Even Greenspan noted with alarm that the Fed was on a path to borrowing too little.
Bush II used the surpluses to argue for his first tax cuts and then the 2002 slump to argue for the 2003 cuts. He left office with the debt over 10 trillion. Bush II can be faulted for the entire 10 Trillion as his policies changed a project Fed debt of 0 into a new high. But it is fairer to to say that he directly owns the 5 Trill or so he added to the 4 Trill from Reagan and Bush I and 1 Trill from pre-Reagan.
These numbers are rounded but it is critical to remind people that Repubs own almost all of the current debt. Repub policies such as Voodoo economics and Trickle Down and Supply Side have been tried by multiple Repubs over the last 30 years and have FAILED. Their claims of income and cap gains and estate tax cuts paying for themselves are disproved by recent history.

If tax cuts are so good, why is it Repubs never call for cutting SSI/payroll taxes when they have been in surplus for the last 30 years? Why do they only call for cuts in taxes that impact the wealthy and corporations? That side of the income stream has been in the red for the last 30 years. It has been using the SSI surpluses to hide how badly it has been deficient. Now the Repubs are demanding that SSI benefits be reduced to protect tax cuts and rates that favor the wealthy and put us into this recession. How very sporting of them.

Posted by: JimK on July 13, 2010 at 9:23 PM | PERMALINK

Why is Boxer behind?

Because it's July - people aren't paying attention yet...

- PonB

Posted by: PonB on July 14, 2010 at 7:37 AM | PERMALINK




 

 

Read Jonathan Rowe remembrance and articles
Email Newsletter icon, E-mail Newsletter icon, Email List icon, E-mail List icon Sign up for Free News & Updates

Advertise in WM



buy from Amazon and
support the Monthly