Saturday, December 08, 2018


Excellent piece by Jack Hellner over at American Thinker:

"Washington Post columnist Catherine Rampell, and many other supposed journalists, repeatedly write about economics as if they know what they are talking about. Problem is, they repeatedly show how ignorant they are.

Of all the things she could possibly say about the late President George H.W. Bush as his funeral goes on, she compliments the man for calling President Reagan’s tax cuts “Voodoo Economics." It's absurd. President George H.W. Bush fully embraced the Reagan Revolution as his loyal vice president and his legacy of greatness is at least partly connected to Reagan's.

But Rampell is still stuck on the campaign rhetoric of 1980, where Reagan and Bush competed for the Republican candidacy and Bush used the term 'voodoo economics' to unseat Reagan, something the voters didn't buy. Bush was apparently willing to forget about that, as he embraced being Reagan's running mate. But Rampell talks of that fleeting moment as if it were the only immutable truth. In the following column, Rampell says that it is crazy and ridiculous for anyone to claim that you could increase tax revenue by cutting taxes:

~ But Bush was end-of-an-era in another crucial way. He might well be the last Republican leader to acknowledge the fundamental fraud of Republican fiscal policy: that tax cuts do not pay for themselves.

Bush was referring to supply-side policies that claimed tax cuts for the rich would unleash so much growth they would generate enough revenue to fund themselves.

Characterizing Reaganomics as “voodoo” was colorful, yes, but it wasn’t crazy. Of course it was ridiculous to claim you could increase tax revenue by cutting taxes.

How little she remembers. The fact is, Ronald Reagan inherited an economic disaster when he came into office in 1981. We had double-digit inflation, double-digit interest rates and double-digit unemployment.

When Reagan took office, he along with Federal Reserve Chairman Paul Volcker worked to wring the double-digit inflation and double-digit interest rates out of the economy. That required double-digit interest-rate hikes and for awhile, it was bitter medicine. But he also worked to wring big government out of the economy. By 1984, he cut the top income tax rate from the punishing 70% to 28%. In fiscal year 1983, federal revenues were $601 billion. By fiscal 1989, they were $991 billion. I would say that all the people who do not acknowledge that Reagan’s supply-side, (or more derisively, 'trickle down' or 'voodoo') economics worked are the crazy ones. If not the liars.

The Bush II tax-cuts-and-government revenue example is even more recent, and possibly an even better example of supply economics at work. Rampell should be aware of that, too. Bush II inherited a recession and a collapsed stock market. In fiscal 2000, the government collected $2.03 trillion in revenues. For three straight years, revenues dropped, and by FY 2003, they were down to $1.72 trillion. Bush got his substantial tax cuts for individuals passed in May 2003 and by FY 2004 revenues were rising again. By FY 2007 they were up to $2.55 trillion. Revenues were up around 50% in four short years because of the tax cuts allowing people to keep more of the money they earned.

Why won’t Rampell and other stenographers report the truth instead of Democrat talking points?

Scroll over to 2018, which is the first year since 2005 that the U.S economy is expected to grow 3% for the year. It is not a coincidence that the results from both years occurred after substantial tax cuts. One of the best things President Trump and the Republicans did was to make the corporate tax cuts permanent to take out the uncertainty. They would have also made the individual tax cuts permanent except for the lack of support from any Democrats as the media, almost in unison, took the Democrats' position. If the Congressional Budget Office would just look at historical facts, they also wouldn’t have come up with the fictional $1.5 trillion "cost.""

While we are at it, here's some relevant theory:

... from the man himself:

There's nothing voodoo about it, just common sense.


No comments: