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Originally posted by Mmmm, Burger (C.J.)
Who are the supply siders in favor of persistent deficits?
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No one supports consistent deficits. The Supply Sider would argue that the deficits do not cause that much crowding out so the tax cuts would continue their positive effect and eventually pay for themselves. Other economist would argue that the crowding out caused by the deficits would deter the growth never allowing the tax cuts to pay for themselves.
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Originally posted by Mmmm, Burger (C.J.) The supply siders so far as I can tell believe only in "starving the beast"--that is, the only way to reduce overall government involvement in the economy is first to cut taxes, and make it impossible to spend more. That's true to a point, because it's been consistently shown that Congress will spend more than 100% of every revenue increase resulting from higher taxes.
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Starving the beat is not an economic argument. It is not part of Supply Sider theory. Supply Sider theory is that tax cuts, even when you have huge deficits, will create growth, and such growth will always eventually cover the deficit. Of course even Supply Siders will admit that at a certain point deficits become so large that they kill growth. In addition, a Supply Sider would agree that some government spending is important. But a Supply Sider would argue that when taxation is above a certain level that cutting the taxes will always bring in more revenue than raising them. Of course once you cut down to that level then tax cuts do not bring more growth. Most Supply Siders think we are above that level right now. Of course when you raise spending you also raise the level. The poin at which cutting taxes will stop bringing in more revenue is hotly debate among Supply Siders.
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Originally posted by Mmmm, Burger (C.J.) Of course, Congress will spend more than 100% of any revenue, so that's a bit irrelevant. And the size of government is fundamentally determined by spending, not by taxing, and absent a committment to cut spending, not much changes.
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This was not true for most of our country's history.
