Reply To: Nancy Pelosi is Right – The Deal is No Deal: Make the Tax-Cuts Permanent

When are you tax cut shtarkers going to specify the spending cuts that will support your proposed tax cuts.

Yes, sometimes lower tax rates increase revenues, but sometimes they do not.

I personally think Hashem is telling us something when He caused the (human and false) theory that tax cuts always yield revenue increases would be illustrated by something called the “Laffer curve”.

The idea that tax cuts always lead to revenue increases is as plausible as the tooth-fairy story. Deficits grew under Reagan, Bush Sr. and Bush the Dim. Deficits disappeared under Clinton (thanks, in part, to the “new taxes” that Bush Sr. supported, which ended the Republican party’s support for him).

Do you know that it took two years for the deficit to start leveling out? Tax raises should generate revenue instantly! Is it a coincidence that the deficit started going down after Gingrich fought Clinton?

Who Really Balanced the Budget

(Federal Deficits in Billions)

1994: Clinton Baseline* – $203 Actual – $203

1995: Clinton Baseline* – $175 Actual – $164

1996: Clinton Baseline* – $205 Actual – $107

1997: Clinton Baseline* – $210 Actual – $22

1998: Clinton Baseline* – $210 Actual – +60

* Congressional Budget Office forecast.

Fiscal policy is difficult, and sloganeering, e.g., Reagan’s “government is always the problem, never the solution,” is a poor substitute for careful analysis and hard choices.