Lessons from the Reagan Tax Cuts

In acolumn in today ’s New York Times, Steven Rattner attacks Trump ’s tax plan for being unrealistic. SinceI also think the proposal isn ’t very plausible, I ’m not overly bothered by that message. However, Rattner tries to bolster his case by making very inaccurate and/or misleading claims about the Reagan tax cuts.Givenmy admiration for the Gipper, those assertions cry out for correction. Starting with his straw man claim that the tax cuts were supposed to pay for themselves.…four decades ago…the rollout of what proved to be among our country’s greatest economic follies — the alchemistic belief that huge tax cuts can pay for themselves by unleashing faster economic growth.Neither Reagan nor his administration claimed that the tax cuts would be self-financing.Instead, they simply pointed out that the economy would grow faster and that this would generate some level of revenue feedback.Which isexactly what happened. Heck, even leftists agree that there ’s a Laffer Curve. The only disagreement isthe point where tax receipts are maximized (and I don ’t care which side is right on that issue sinceI don ’t want to enable bigger government).Anyhow, Rattner also wants us to believe the tax cuts hurt the economy.…the plan immediately made a bad economy worse.This is remarkable blindness and/or bias. The double dip recession of 1980-1982 was the result of economic distortions caused by bad monetary policy (by the way, Reagandeserves immense credit for having...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs