I wanted to highlight something important from David Leonhardt’s column this morning that I haven’t seen any comment about. From the column:
“When I asked Dale Jorgenson, the eminent expert on productivity (and a Republican), what had been the positive aspects of President George W. Bush’s economic policy, Mr. Jorgenson said, ‘I don’t see any redeeming features, unfortunately.'”
The reason I call attention to this is that there are still a great many conservatives and Republicans who think the tax cuts enacted by George W. Bush were the epitome of supply-side economics. In my Impostor book I devoted a whole chapter to explaining why they had only the most superficial resemblance to a true supply side policy. Among the reasons:
1. None of the tax cuts were ever enacted permanently and most will expire next year. It was always a key tenet of supply-side economics that only permanent tax cuts affected incentives; temporary tax cuts never did.
2. The marginal rate reductions were small and phased-in over several years. Recent research shows that this is very detrimental, economically. For example: The timing of fiscal interventions: Don’t do tomorrow what you can do today.
3. The vast bulk of Bush’s tax cuts in dollar terms were tax rebates and tax credits with no supply-side effect whatsoever.
Therefore, it is not surprising that there is no evidence of a supply-side economic effect anywhere in the data of the last few years. Jorgenson is right; the Bush tax cuts were a bust. Right wingers should stop defending them.