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September 05, 2007

Were The Tax Cuts Supply-Side Crackpottery?


McMegan writes, "The Bush administration was not cutting taxes out of crackpot supply-sidism; it was cutting taxes because it wanted to cut taxes, and making extravagently exaggerated claims about the benefits of its policies." Well that makes me feel better. So they're liars who just pretend to be crackpots.

But to say they acted like supply siders to get their tax cuts doesn't explain why they so thirsted for them in the first place. The Bush administration offered at least four, occasionally self-contradictory, rationales for their tax cuts. The first was the basic "the people of America have been overcharged, and I'm here to ask for a refund" appeal. That's a fairness argument. Then there was the policy side of that appeal, which was that "we had a tax surplus," and there was no reason for the government to keep that money. Then, in 2002, the good times ended, and they moved to a stimulus argument, as when Fleischer said "cutting taxes is the best way to spur growth and therefore have a return of bigger surpluses." Then the recession ended, we were told "the tax cuts have worked," and we needed more to keep the growth steady.

These contradictory claims actually fit with magical supply siderism, in which tax cuts are a cure-all, even when the ills are contradictory. So one explanation is that these guys are committed supply-siders of the worst sort. Another is that their rich funders wanted the cuts, and the administration was indiscriminate in choosing rationales with which to sell them.

Unlike Bush, I can't see into souls, so their motivations remain hidden to me. But whether the administration wanted the cuts because they were actual supply-siders or they just pretended to be actual supply-siders in order to please plutocrats seems a bit immaterial. The tax cuts were indeed crackpot supply-siderism, and so were the "extravagently exaggerated claims" made in their favor. The administration's "true" motivations are unknowable, but then, they don't really matter anyway. Walks like a duck, quacks like a duck, etc.

September 5, 2007 | Permalink


McMegan is a real hack, the Marty Peretz of economics journalism.

Posted by: John | Sep 5, 2007 3:14:08 PM

I'm not seeing what the point of this is? Does it really matter at all if their motives were pure ideology or pure greed?

I suspect that their ideology is fueled by their greed - they want an excuse to cut taxes for the rich and the religion of supply-side economics gives them a mandate to cut taxes fpr the rich. If supply-side economics didn't exist, they'd have to invent it (which, come to think of it, they did).

Posted by: NonyNony | Sep 5, 2007 4:13:33 PM

You should address the rest of her post too. It is all bullshit, not just point (4)

Posted by: mickslam | Sep 5, 2007 4:44:48 PM

They wanted to shift resources to the rich.

The rest is just PR

Posted by: richard | Sep 5, 2007 5:10:04 PM

I think really rich people like tax cuts. While there is some truth hiding in that supply-side magic, we passed that truth long ago. Now it is nothing more than money for the people who really run the Republican Party, with a pinch of Starve the Beast for flavor.

The rest is just hand-waving.

Posted by: Mark | Sep 5, 2007 6:23:16 PM

Why do you link to that idiot? Yglesias can suck up and get nowhere all on his own.

Posted by: calling all toasters | Sep 5, 2007 8:06:29 PM

Remember, above all, it's really, really, really important for us to put ourselves in the positions of Republican leaders, and to determine whether they supported policies because they were evil or because they were crazy.

For example, if our government is paying to slaughter hundreds of thousands of Guatemalan civilians, it would be much, much worse if Reagan & pals did so because they were doing so for cynical reasons than if they did so for loony crackpot reasons.

The most important thing we can ever, ever do is speculate about the motivations of Our Leaders and whenever we place ourselves hypothetically in someone else's position, let's make sure to always imagine ourself as Ronald Reagan and see the world from His point of view, instead of, say, the person whom his policies are affecting.

That is the Noble and Serious way to think about stuff.

Posted by: El Cid | Sep 5, 2007 9:13:49 PM

Believing in supply-side economics is perhaps like believing in the Rapture. In polite circles, conservatives either don't believe in it or won't admit to believing. But among the conservative unwashed, you can't not believe in it. A talk radio host who denied that tax cuts increase tax revenues would be about as successful as a televangelist who preached that the Rapture was just an allegory.

Posted by: kth | Sep 5, 2007 9:24:21 PM

"The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness."

Posted by: J.K. Galbraith | Sep 5, 2007 11:02:04 PM

They would rather be billionaires in a nation of paupers than millionaires in a country with a middle class.

Posted by: Juanita de Talmas | Sep 5, 2007 11:25:46 PM

The other really instructive thing that happened yesterday on McArdle's blog was that half of her long-time, devoted readers came out on comment threads in favor of the gold standard.

She should start paying some serious attention to what her "base" actually thinks.

Posted by: brooksfoe | Sep 6, 2007 7:29:11 AM

The beauty of this supply-side quackery from the Republican standpoint is that one can never know for certain what revenues would have been without the cuts (we would probably have no deficit at all).

Posted by: bob h | Sep 6, 2007 7:43:54 AM

McCardle is both stupid and dishonest. She should never be allowed to live her ridiculous claims about supply-side tax cuts in American politics down. What she said is the exact opposite of the obvious truth.

McCardle is not to be trusted. She has proven by her words that she is a liar.

Posted by: Junius Brutus | Sep 6, 2007 5:42:42 PM

How about this argument for tax cuts:

It's my f-ing money, I f-ing earned it, and you can't f-ing have any more of it, you f-ing g.d. economic ignoramuses.

50+% of my marginal is F-ING ENOUGH.

Posted by: Chester White | Sep 9, 2007 2:08:13 PM

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