Hitting the Laffer Curve
The very thought of Democrats rewriting the nation’s tax laws is driving Republicans bonkers. For two days in a row, Bloomberg’s financial reporters and pundits have lost their editorial cool in stories forecasting how Charlie Rangel’s proposed tax reforms that zing the rich and help the poor “may derail his fellow Democrats’ pre-election momentum.”
Say what?
The House Ways and Means Committee chairman is offering a sweeping tax overhaul he calls “the mother of all reforms.” Rangel’s proposal would raise taxes on the rich while cutting bills for the working poor.
Somehow, Bloomberg thinks that proposition is a loser with American voters in 2008. Perhaps it is in that peculiar little world that gets most of its information from the Weekly Standard and Fox News. To them, Charlie’s proposal provides “chilling glimpse of the abyss.” Those were the exact words of Bloomberg columnist, Kevin Hassett.
This surreal view is enjoyed by Republicans in Congress who don’t understand why they are becoming an endangered species. Here is House Minority Whip Roy Blunt’s assessment of Rangel’s plan: “Very seldom in politics do your opponents give you this kind of gift.”
Our country is in a disastrous financial fix not only because of an unwanted trillion-dollar Iraq war but because earlier GOP elected leaders and their tax gurus gave us “the Laffer Curve” and voodoo economics. Republican “supply side” ideology claims tax cuts pay for themselves. That notion was roundly condemned in a recent New Yorker magazine article by James Surowiecki. “Myriad studies have demonstrated that both the Reagan tax cuts of the 1980s and the tax cuts put through under the current administration shrank government revenues and led to bigger budget deficits.”
Somehow, these documented facts elude Republican politicians and most of the news media. President Bush told Fox News that his tax cuts had “yielded more tax revenues, which allow us to shrink the deficit.” You can imagine why there was no rebuttal on that network. All the top dogs running for the GOP Presidential nomination believe tax cuts are the answer to all things economic.
In Jonathan Chait’s new book, The Big Con, he reminds us that from the end of World War II to 1973 the top income tax rate was between 70 percent and 91 percent. Yet during this same period, the country experienced massive economic growth. When Reagan came into office he cut the top rate from 70 percent to 50 percent, resulting in budget deficits up to $200 billion. When Clinton took office, he increased the top rate from 31 percent to 39 percent and the U.S. economy in the 1990s boomed.
Chait makes a convincing case that supply side economics is really about class, not the economy. Right on cue, here’s what Virginia Republican Congressman Eric Cantor has to say about Rangel’s proposed tax reform: “This is all about class warfare.” Right, Eric, only this time Democrats and ordinary folks could be winning.
Even Bloomberg made this concession: “The Republican strategy of portraying Democrats as tax-and-spend liberals may not work as well with voters as it has in the past. In a Bloomberg/Los Angeles Times poll this week, a majority of voters of both parties said they hadn’t benefited from Bush’s tax reductions, and 60 percent said they were willing to see those cuts repealed to pay for universal health care.”
If Rangel is right, and I’m sure he is, Democrats will Laffer all the way to the White House.
Say what?
The House Ways and Means Committee chairman is offering a sweeping tax overhaul he calls “the mother of all reforms.” Rangel’s proposal would raise taxes on the rich while cutting bills for the working poor.
Somehow, Bloomberg thinks that proposition is a loser with American voters in 2008. Perhaps it is in that peculiar little world that gets most of its information from the Weekly Standard and Fox News. To them, Charlie’s proposal provides “chilling glimpse of the abyss.” Those were the exact words of Bloomberg columnist, Kevin Hassett.
This surreal view is enjoyed by Republicans in Congress who don’t understand why they are becoming an endangered species. Here is House Minority Whip Roy Blunt’s assessment of Rangel’s plan: “Very seldom in politics do your opponents give you this kind of gift.”
Our country is in a disastrous financial fix not only because of an unwanted trillion-dollar Iraq war but because earlier GOP elected leaders and their tax gurus gave us “the Laffer Curve” and voodoo economics. Republican “supply side” ideology claims tax cuts pay for themselves. That notion was roundly condemned in a recent New Yorker magazine article by James Surowiecki. “Myriad studies have demonstrated that both the Reagan tax cuts of the 1980s and the tax cuts put through under the current administration shrank government revenues and led to bigger budget deficits.”
Somehow, these documented facts elude Republican politicians and most of the news media. President Bush told Fox News that his tax cuts had “yielded more tax revenues, which allow us to shrink the deficit.” You can imagine why there was no rebuttal on that network. All the top dogs running for the GOP Presidential nomination believe tax cuts are the answer to all things economic.
In Jonathan Chait’s new book, The Big Con, he reminds us that from the end of World War II to 1973 the top income tax rate was between 70 percent and 91 percent. Yet during this same period, the country experienced massive economic growth. When Reagan came into office he cut the top rate from 70 percent to 50 percent, resulting in budget deficits up to $200 billion. When Clinton took office, he increased the top rate from 31 percent to 39 percent and the U.S. economy in the 1990s boomed.
Chait makes a convincing case that supply side economics is really about class, not the economy. Right on cue, here’s what Virginia Republican Congressman Eric Cantor has to say about Rangel’s proposed tax reform: “This is all about class warfare.” Right, Eric, only this time Democrats and ordinary folks could be winning.
Even Bloomberg made this concession: “The Republican strategy of portraying Democrats as tax-and-spend liberals may not work as well with voters as it has in the past. In a Bloomberg/Los Angeles Times poll this week, a majority of voters of both parties said they hadn’t benefited from Bush’s tax reductions, and 60 percent said they were willing to see those cuts repealed to pay for universal health care.”
If Rangel is right, and I’m sure he is, Democrats will Laffer all the way to the White House.
posted by Victor Kamber | 2:05 PM
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