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Originally posted by Tyrone Slothrop
I don't think anyone disagrees with the concept that tax cuts, in general, promote growth.
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Not everyone. Some Economists think that deficits really hamper growth and that is why they were against Bush's tax cut. Even a Supply Sider would agree that at a certain level tax cuts would cause a decrease in growth.
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Originally posted by Tyrone Slothrop
The criticism of the Bush tax cuts -- well, one criticism of them -- is that they were a less effective way of spurring growth than other alternatives.
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This ought to be good. What alternatives?
I
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Originally posted by Tyrone Slothrop don't think your discussion above captures the various issues on which supply-siders disagree with other economists, conservative and otherwise.
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What did I miss?
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Originally posted by Tyrone Slothrop I thought you were making the claim above that tax cuts pay for themselves in the short term in the sense that because they spur growth, the result is that the government takes in more revenue at lower tax rates than it would have at higher rates absent that growth. Only a few economists not on the government payroll believe this, and it's not clear that those on the government who are saying it also believe it.
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If tax cuts spur more growth than they would absent the tax cuts then they will pay for themselves. Full Stop. The only issue is how long will it take. If the tax cuts cause more crowding out than growth, they will not pay forthemselves. The Economists who don't think the Bush tax cut was a good thing think that the crowding out takes away more growth than without them. So there may be growth but it can't be attributed to the tax cut. The issue is whether they spur growth. If you have massive deficits, and you cut taxes without cutting spending, then at some point the crowding out will negate any positive effect of the tax cut. Supply Siders think that the crowding out occurs at only much higher levels. Keynsians think that when the economy is already growing a tax cut will not increase growth. The economy is already growing at the maximum rate so a tax cut will only lead to more crowding out - no gain.
No Economist argues that the Bush tax cut brought in more growth than would have otherwise occurred but they were a bad call because they have not paid for themselves (and the implication in there is yet). That is only an argument that would be made on this board or by someone who doesn't understand economics.
