A Lost Opportunity
The GOP’s curious allegiance to tax cuts is clouding its judgment about enacting entitlement reform.
Ron Brownstein
National Journal
Updated: July 15, 2011 | 9:33 a.m.
July 14, 2011 | 4:59 p.m.
Maybe President Obama never would, or could, have delivered enough congressional Democrats to pass a “grand bargain” to tame the long-term deficit. But as the prospects for a big deal dwindle, a combination of ideological rigidity and political hubris is preventing Republicans from putting him to that test.
The ideological excess concerns taxes. House Speaker John Boehner this week insisted, “The American people understand that tax hikes destroy jobs.” In fact, there is simply no evidence that every tax cut creates jobs or that every tax increase destroys them.
That’s a big lesson of the past three decades. In 1981, President Reagan massively cut taxes with his supply-side reductions in income-tax rates. Still sluggish at first, the economy eventually soared for the remainder of his presidency. By the fourth year after Reagan signed the tax cut, the economy had created 6.3 million new jobs (an increase of 6.8 percent); eight years on, the economy had created 16.5 million new jobs, up 18 percent.
Sounds like a pretty good case for tax cuts. But the economy produced even more jobs after President Clinton raised taxes on the wealthy in 1993. Four years after Clinton’s tax increase—which Republican opponents at the time denounced as a certain job-killer—the economy had produced 11.8 million new jobs, an increase of nearly 11 percent. Eight years after the tax increase, the economy had added 20.6 million jobs, up 18.6 percent. Measured in both absolute and percentage terms, the economy produced more jobs after Clinton raised taxes than after Reagan cut them.
(More here.)
Ron Brownstein
National Journal
Updated: July 15, 2011 | 9:33 a.m.
July 14, 2011 | 4:59 p.m.
Maybe President Obama never would, or could, have delivered enough congressional Democrats to pass a “grand bargain” to tame the long-term deficit. But as the prospects for a big deal dwindle, a combination of ideological rigidity and political hubris is preventing Republicans from putting him to that test.
The ideological excess concerns taxes. House Speaker John Boehner this week insisted, “The American people understand that tax hikes destroy jobs.” In fact, there is simply no evidence that every tax cut creates jobs or that every tax increase destroys them.
That’s a big lesson of the past three decades. In 1981, President Reagan massively cut taxes with his supply-side reductions in income-tax rates. Still sluggish at first, the economy eventually soared for the remainder of his presidency. By the fourth year after Reagan signed the tax cut, the economy had created 6.3 million new jobs (an increase of 6.8 percent); eight years on, the economy had created 16.5 million new jobs, up 18 percent.
Sounds like a pretty good case for tax cuts. But the economy produced even more jobs after President Clinton raised taxes on the wealthy in 1993. Four years after Clinton’s tax increase—which Republican opponents at the time denounced as a certain job-killer—the economy had produced 11.8 million new jobs, an increase of nearly 11 percent. Eight years after the tax increase, the economy had added 20.6 million jobs, up 18.6 percent. Measured in both absolute and percentage terms, the economy produced more jobs after Clinton raised taxes than after Reagan cut them.
(More here.)
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