Supply-Side Economics

[finnbow]

Originally Posted by whell

No, its not (your and others attempts to mis-characterize it not withstanding).

OK, name a single time when massive GOP tax cuts were accompanied with massive spending cuts of the same scale (or even significant spending cuts). In short, corresponding spending cuts have never been a feature of supply-side theory or practice, but massive deficits have always been.

[whell]

Originally Posted by finnbow

OK, name a single time when massive GOP tax cuts were accompanied with massive spending cuts of the same scale.

Your question is flawed, since the purpose of a tax cut in the supply side context is not to produce a spending reduction. The purpose of a tax cut in the supply side context is to make the cost of capital cheaper, thus encouraging more activity relative the converting capital and stimulate economic growth.

I'm repeating myself here, but:
The central premise of supply side economics is that the more an activity — such as production — is taxed, the less of it is generated. Likewise, the less an activity is taxed, the more of it is generated. Since you get more conversion of capital when the cost of converting capital (production) is lowered, the tax revenue generated by that process should increase.

If you want to critique supply side practitioners for implementing tax reductions while failing to control spending, feel free. But since supply side is an economic theory aimed at increasing economic activity, you can't fault the theory when its practitioners fail to follow basic budgeting principles.

But then, you'd also have to show a president who managed spending and debt appropriately. The last US President who didn't add to the ballooning national debt during his tenure was Calvin Coolidge. I suspect political types from both parties could learn a thing or two about managing the budget from ol' Calvin.

[finnbow]

Originally Posted by whell

Your question is flawed, since the purpose of a tax cut in the supply side context is not to produce a spending reduction. The purpose of a tax cut in the supply side context is to make the cost of capital cheaper...

If so, supply-side has been an abject failure and can never reach this objective. It has always led to massive increases in debt which raises interest rates, thereby increasing the cost of capital.

In the words of Reagan's own Budget Director "The Republican Party has totally abdicated its job in our democracy, which is to act as the guardian of fiscal discipline and responsibility. They're on an anti-tax jihad -- one that benefits the prosperous classes" and his Vice President describing supply-side as "voodoo economics."

In summary, supply-side is an inherently flawed economic theory that has never worked and simply can't work. Reagan proved it doesn't work. Dubya proved that again. Kansas Governor Brownback proved it yet again. And Trump's latest effort put the icing on the cake. Per the scientific method, a theory only gains credence when an hypothesis is borne out in an experiment and subsequently repeated. Supply-side has never once proven to work. In fact, in every instance it has done exactly the opposite of what its proponents say it will do (i.e., pay for itself). Simply put, it is flawed economic theory.

[whell]

Originally Posted by finnbow

If so, supply-side has been an abject failure and can never reach this objective. It has always led to massive increases in debt which raises interest rates, thereby increasing the cost of capital.

Uh, no.
https://www.cnbc.com/2016/11/17/200-...one-chart.html

The other issue you have with your statement about rates is that they are subject to manipulation. On the other hand, even if the Fed chose to raise rates, they'd still be quite low compared to historical averages.

You don't seem to understand that increases in SPENDING lead to debt. It happened in the '80's and its happening now. Tax revenues increased nearly every year in the 80's, but due to Congress's unchecked appetite for spending - and the President's willingness to let it go on - spending outpaced the increases in revenue. Tax revenues also increased for your hero Barry, but he still is the clear winner when it comes to adding to the debt because of....wait for it....SPENDING!