I stand partially corrected. Bush's argument was explicitly a Keynesian type demand argument and not a supply side argument, so you are correct. However, my point is that when justifying lower tax rates on upper incomes (as opposed to all tax cuts), the GOP does NOT make the argument that the tax cut is good because more yachts will be purchased, but that the upper income taxpayer will be more productive in creating goods and services. Bush's speech in 2001 was targeted at "consumers" needing relief from "credit card debt," and not small business owners, who were the subject of recent GOP rhetoric defending the maintenance of the Bush rates on the top earners.
I stand by my point that it is not analytically useful to call "supply-siders," who believe tax rates affect the willingness to take risk and produce, are effective Keynesians simply because deficits may correlate with lowering tax rates at any given time. Because of the nature of democratic politics, it is all but impossible to see a true supply-side experiment - a significant drop from a high marginal tax rate and a correlative cut in spending. Keynesians would say the spending cut would likely negate the tax cut, so the outcome for growth would be negligible, while the supply-sider would say the spending cut would not negate the tax cut. As democratic politics will not permit the experiment, we can only speculate. David Shemano From: [email protected] [mailto:[email protected]] On Behalf Of raghu Sent: Tuesday, January 08, 2013 11:15 AM To: Progressive Economics Subject: Re: [Pen-l] Keynesians [was: Mark Weisbrot: Why Paul Krugman should be President Obama's pick for US treasury secretary On Mon, Jan 7, 2013 at 6:25 PM, David Shemano <[email protected]<mailto:[email protected]>> wrote: Give me one example whether a GOPer advocated lower rates on the rich to stimulate aggregate demand. Are you kidding me? This is the reason the right wing gives for every tax cut they every propose. Conservatives are Keynesians when it suits them. See e.g. George W. Bush from 2001. You cannot get more explicit than this: http://www.nytimes.com/2001/03/28/us/excerpts-from-bush-speech-promoting-his-tax-cuts.html ---------------------------------snip We must put more money in the hands of consumers in the short term and restore confidence and optimism for the long term. We need an immediate stimulus for our economy and a pro-growth environment for years to come. [...] In the short term, the American consumer needs a hand. About 25 million families are carrying more than $10,000 in credit-card debt. Many families have tried to reduce their debt by tapping into their home equity and, partly as a result, the average homeowner's equity share in his or her house declined in the 1990's. More than a few consumers counted on their earnings in the stock market to help them carry their obligations. They need tax relief fast. In fact, they need it yesterday. So I strongly support the idea of backdating tax relief to get cash into the consumers' hands as swiftly as possible. And I applaud the members of Congress, Republicans and Democrats, who have come forward to endorse quick action on tax relief. Yet our economy needs more than a pick-me-up, more than a one-time boost.
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