Supply-Side Economics

[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.