In a message dated 12/5/02 9:34:23 AM, [EMAIL PROTECTED] writes: << > Did "Reaganomics" essentially hinge on the Laffer
> Curve (i.e. the elasticity of tax receipts w/ respect > to tax rate [?]), and its implications regarding tax > revenue? Or was there alot more to it than that? Paul Craig Roberts has a fascinating book about economic policy in the early years of the Reagan administration, titled Supply-Side Revolution (Harvard, 1984). A few years ago, Roberts and Blinder were involved in an acrimonious and rather nasty exchange about whether the Laffer curve was part of official policy. Essentially, as a I recall it, Blinder claimed administration policy was based on the Laffer curve, Roberts said it was not and dared Blinder to offer some evidence. Blinder's response was to say something like "it was well known at the time" but not offer any actual evidence, and the exchange went downhill from there. Bill Sjostrom >> I've noticed that some economists seem to ignore not only the conflicts between the White House and Congress over policy, but the conflicts within a White House and within even the same party within Congress, and assume that the resulting mess that finally comes out represents the true policy inclinations of the president. I remember one of my masters-level economics professors--the best teacher I've had in roughly 40 years of schooling--claiming that the Reagan administration had reverted to Keynesianism. I'd be willing to bet that you couldn't find more than one or two devoted Keynesians at most in the Reagan administration, and that nothing that his administration proposed, either as legislation or as regulation, came from a Keynesian motivation. Some members of the Reagan administration believed in supply-side economics. In fact, it's hard to disagree with the core tenet of supply-side economics--incentives matter--although of course the CBO routinely ignores this very sensible tenet whenever it "scores" (calculates) its estimates of tax proposals. Many members of the Reagan administration didn't believe in the notion that tax cuts would spur so much growth and reduce so much tax avoidance as to be more than fully self-financing. A Treasury study indicated that the cuts in the TRA of 1984 were more than 90% self-financing. I've never seen a study on the larger across-the-board tax cuts. Virtually all the studies I've seen of cuts in the tax on captial-gains tax show it to be considerably more than self-financing. Over the 8 years of the Reagan presidency, nominal tax receipts doubled, and even real tax receipts rose on the order of a third. I've never seen anyone try to calculate how much of the increase came from the cuts in marginal tax rates; usually the opponents of tax cuts argue that tax receipts would have grown anyway from growth in the economy, thus trying to dismiss any incentive effect from cutting marginal tax rates, because they don't understand, or don't want to understand, that incentives matter. David
