In a National Journal column that dovetails nicely with today’s Paul Krugman, Ron Brownstein sizes up the supporting evidence for the “voodoo economics” that’s taken over the modern GOP. Specifically, he takes up the holiest article of Republican faith today – that tax cuts pay for themselves as they generate prosperity, whereas any rise in taxes hurts kills jobs and drags on the economy. It’s the argument Republicans trot out to justify blocking any revenue-raising tax measure in the debt-ceiling talks. So it’s kind of a problem – don’t you think? – that, in Brownstein’s words, there’s “simply no evidence” to support it. Let’s examine the record.
• In 1981, Ronald Reagan massively cut taxes. Over the next eight years, the economy grew by 18 percent, adding 16.5 million jobs.
• In 1993, Bill Clinton raised taxes on the wealthy (Republicans at the time railed against his job-killing ways). Eight years later, the economy had grown 18.6 percent, adding 20.6 million jobs. Brownstein: “Measured in both absolute and percentage terms, the economy produced more jobs after Clinton raised taxes than after Reagan cut them.”
• In 2001, George W. Bush massively cut taxes. The economy had its worst decade for job creation since the Great Depression. Eight years (and a further tax cut) later, nearly 1.6 million fewer Americans had jobs.
• In 2010, Barack Obama and congressional Republicans reached a deal to extend the Bush tax cuts through 2012, souping them up with a new payroll-tax reduction. Job growth this year has been pitiful.
So the intellectual case for opposing tax hikes is thin, to say the least. And a lot of Republicans doubtless know that. (How many genuinely believe in supply-side mumbo-jumbo is an interesting question.) But come on: “voodoo economics” has always been more about shrinking government than about boosting the economy.
A big problem with this, notes Brownstein, is that “[e]specially as our society ages, Washington will need significantly more revenue … to support even the minimal level of government that most Americans will accept.” (And by the way, government revenue is at its lowest level as a share of the economy since pre-Medicare, pre-Medicaid, pre-highways 1950.) The fact is, Republicans are hell-bent, for ideological – not economic – reasons, on shrinking government way beyond that “minimal level.” And if they prevail, “most Americans” will pay the price.
• ‘A Lost Opportunity’ [Ronald Brownstein, National Journal]