Fox, WSJ Still Falsely Claiming Lower Taxes Generate More Revenue

From Media Matters for America:

EPI: Bush Tax Cuts "Added $2.6 Trillion To The Public Debt Over 2001-10." In a September 26 article, Andrew Fieldhouse of the Economic Policy Institute (EPI) wrote:

A spending-cuts-only approach is regressive in that it forces the brunt of deficit reduction on the backs of poor and working families while ignoring a prime culprit of the budget deficit: the expensive, ineffective, and unfair Bush-era tax cuts. These top-heavy tax cuts added $2.6 trillion to the public debt over 2001-10 and will add $3.8 trillion to deficits over the next decade if fully continued. [EPI, 9/26/11]

Bartlett: Revenue Has Been Historically Low Because "Taxes Were Cut In 2001, 2002, 2003, 2004 and 2006." In a July 26 New York Times blog post, Bruce Bartlett, former policy adviser to Presidents Ronald Reagan and George H.W. Bush, wrote:

In a previous post, I noted that federal taxes as a share of gross domestic product were at their lowest level in generations. The Congressional Budget Office expects revenue to be just 14.8 percent of G.D.P. this year; the last year it was lower was 1950, when revenue amounted to 14.4 percent of G.D.P.

But revenue has been below 15 percent of G.D.P. since 2009, and the last time we had three years in a row when revenue as a share of G.D.P. was that low was 1941 to 1943.

Revenue has averaged 18 percent of G.D.P. since 1970 and a little more than that in the postwar era. At a similar stage in previous business cycles, two years past the trough, revenue was considerably higher: 18 percent of G.D.P. in 1977 after the 1973-75 recession; 17.3 percent of G.D.P. in 1984 after the 1981-82 recession, and 17.5 percent of G.D.P. in 1993 after the 1990-91 recession. Revenue was markedly lower, however, at this point after the 2001 recession and was just 16.2 percent of G.D.P. in 2003.

The reason, of course, is that taxes were cut in 2001, 2002, 2003, 2004 and 2006.

[...]

According to a recent C.B.O. report, they reduced revenue by at least $2.9 trillion below what it otherwise would have been between 2001 and 2011. Slower-than-expected growth reduced revenue by another $3.5 trillion.[The New York Times, 7/26/11]

Krugman: After Reagan's 1981 Tax Cuts, "Revenues Are Permanently Reduced Relative To What They Would Otherwise Have Been." In a July 2010 post on his New York Times blog, Nobel Prize-winning economist Paul Krugman wrote that "the revenue track under Reagan looks a lot like the track under Bush: a drop in revenues, then a resumption of growth, but no return to the previous trend." He added, "This is exactly what you would expect to see if supply-side economics were just plain wrong: revenues are permanently reduced relative to what they would otherwise have been." [The New York Times, 7/15/10]

More here.

Then the article goes on to quote some five or six more economists who plainly state that tax cuts do not result in increased revenue. And, of course, tax cuts don't result in increased revenue. How could they? When you cut taxes, you're depriving the government of revenue, not increasing it. What's amazing isn't that the right wing would be so brazen to insist for decades that something so obviously false is, in fact, true. What's amazing is that they got so many people to believe it. My Dad, for one, and lots of other rank-and-file Republicans.

The idea is that when you cut taxes, people take that extra money and use it to stimulate the economy; they say this works best with cutting taxes for the rich because they supposedly invest their tax savings, which allows businesses to grow and hire more workers, who then pay taxes, and all this new economic activity supposedly results in even more income for the government simply because the power of tax cuts grows the economy, creating much more income to be taxed.

Except that, in the thirty years that conservatives have been pushing this claptrap, economists have been studying the actual data about what happens to the economy when the government cuts taxes, and what happens in the real world just doesn't match the theory. At all. I mean, no surprise, of course, because cutting taxes fucking deprives the government of income, not the reverse. But it's nice to have some real study on the topic. Apparently, what happens is that the rich simply stick the money into savings accounts where it earns them some interest, but doesn't expand the economy, doesn't create new jobs, doesn't grow businesses.

But when have facts ever had anything to do with Republicans? Okay, once upon a time, Republicans and facts had a sort of passing relationship, but that was long ago. Today, they're happy to live in their intellectually constructed fantasy world where cutting taxes is the solution to every economic problem that has ever existed--you know, sometimes I wonder what would happen if there weren't any taxes to cut; what would the GOP say then?

What really kills me about this is how the corporate media and Democrats don't just scoff at Republicans when they push this bullshit. So yeah, Republicans are lame, but perhaps the Democrats are worse, because they know better for sure, and do nothing to cut these guys off at their knees. I mean, really. The GOP is all tax cuts all the time and nothing else, and it's all based on a concept that is totally false, that tax cuts are good for the economy. If the Dems made a massive rhetorical push on this, made all their campaigns about how the Republicans are in shit up to their ears on the tax cut issue, maybe they'd see some headway.

But no. They're idiots, too.

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