The Response to "Tax Cuts Generate Tax Revenue"

Every one of the Republican candidates is bringing out the old canard (supply-side economics!) that tax cuts generate growth that produce tax revenues that in turn are even greater than the cuts. This sounds too good to be true, is in fact false, and is not supported by any responsible and professional economist. Here, Krugman lays out the data for all to see. You decide, and don't fall for the discredited, but still repeated, Republican Reagonite myth.

Actually, federal revenues rose 80 percent in dollar terms from 1980 to 1988. And numbers like that (sometimes they play with the dates) are thrown around by Reagan hagiographers all the time.

But real revenues per capita grew only 19 percent over the same period — better than the likely Bush performance, but still nothing exciting. In fact, it’s less than revenue growth in the period 1972-1980 (24 percent) and much less than the amazing 41 percent gain from 1992 to 2000.

Is it really possible that all the triumphant declarations that the Reagan tax cuts led to a revenue boom — declarations that you see in highly respectable places — are based on nothing but a failure to make the most elementary corrections for inflation and population growth? Yes, it is. I know we’re supposed to pretend that we’re having a serious discussion in this country; but the truth is that we aren’t.

Update: For the econowonks out there: business cycles are an issue here — revenue growth from trough to peak will look better than the reverse. Unfortunately, business cycles don’t correspond to administrations. But looking at revenue changes peak to peak is still revealing. So here’s the annual rate of growth of real revenue per capita over some cycles:

1973-1979: 2.7%
1979-1990: 1.8%
1990-2000: 3.2%
2000-2007 (probable peak): approximately zero

Do you see the revenue booms from the Reagan and Bush tax cuts? Me neither.

On a Permanent War Footing

This Glenn Greenwald post lays out the painfully obvious with some devastating charts thrown in. the US is an Empire and a warmongering one at that. Let's not keep kidding ourselves. The military-industrial complex Eisenhower warned about has in fact taken over. Even the major Democratic candidates are all proposing to increase the size of the military over the already incredibly bloated levels of today. We have no powerful enemies other than ourselves. Do read his whole post.

In indisputable sum, we are the world's empire, in a state of permanent war readiness. In American politics and policy, there is no distinction between "peacetime" and "war." We're the most militarized country in the world by far, on permanent war footing, far beyond what anyone could ever remotely argue is necessary for "defense" or a "strong defense," no matter how broad a definition one wants to adopt for those terms.