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Always Look on The Supply-Side of Life
By Matt Margolis | January 1, 2004
Jerry Bowyer has a great article on the benefits of George W. Bush’s tax cuts.
“The tax cut, ” Bowyer said, “did not just benefit the economy; it benefited economics, too. That is, it created the conditions for an experiment which would test rival theories of how the economy works.” Bowyer calls this “The Great Supply-Side Experiment of 2003″
Liberals on the blogosphere go crazy whenever supply-side economics is brought up. These hypnotized Krugman-ites, always have some “facts” as to why supply-side economics doesn’t work, however, too their dismay and to my pleasure, Jerry Bowyer explains just how supply-side economics worked with the Bush tax cuts.
The concept is very simple, when rates go down, receipts go up. The more of their own money the people have to spend, the more they spend. As the Laffer Curve attempts to explain this - and Bush’s tax cuts have justified it. While the idea a controversial one, Bowyer tells us that it “should not be controversial; in fact it is nearly geometric in its certainty.”
This year’s [2003] economic experiment indicates that in fact rates were indeed too high. The evidence for this is that the beginning of FY 2004 is showing higher tax revenues than the comparable period for FY 2003. It appears that the tax cut of 2003 has created higher tax receipts for 2004. For October and November of this year (which are the first two months of FY 2004 and the only two months available so far) Federal tax receipts were $254.03 billion which is $9.5 billion higher than last year’s revenues of the same two months. In fact the Bush tax cut last spring seems to have even had a positive impact on FY 2003 despite the fact that it happened late in the fiscal year: The Congressional Budget Office had forecasted a deficit of $401 billion and The Office of Management and Budget had forecasted a deficit of $455 billion. When the actual numbers came out recently it turned out that OMB had been $81 billion too pessimistic; the deficit turned out to be a much lower than expected $374 billion.
The Krugman-ites have been fighting a losing battle. However, George W. Bush’s battle to get his tax cuts passed were not only a victory for him, but now they are also a victory for our economy.
The typical Krugman-ite clichés include “irresponsible tax cuts,” “deficit causing tax cuts” and my personal favorite: “tax cuts for the rich.” The silly idea that the wealthier you are the less deserving you are of your own money is a popular belief among these people - even though they don’t come right out and say it most of the time. The bottom line is this: if not for tax cuts for “the rich” the tax cuts wouldn’t work at all:
Some opponents of tax cuts have questioned whether there ought to be large tax cuts for “the rich.” Some Democrats say that they’re all in favor of tax cuts but that they should be for the poor and middle class only since the rich don’t need them. Well if you believe that, you must have been very happy with the year 2001. It was the perfect demand-side tax cut: the rich were excluded and the poor and middle class received their cuts in the form of a consumer-demand-stimulating rebate check. Bush critics derided the results as “the worst economy since Herbert Hoover.” That was of course a grotesque overstatement. What 2001 gave us was a rather sluggish recovery which is exactly what you get when you leave rich people out of the tax cut equation.
It wasn’t until May 2003, when the tax cuts included the wealthy taxpayers that our economic recovery turned into a boom. The wealthy consist largely of small business owners, and once they got their tax cut, the unemployment rate started to drop. The unemeployment was at a slightly high rate of 6.4% when Bush signed the tax cut into law earlier this year. Now it stands 5.9% and continues to drop.
It’s time for the Krugman-ites to look on the bright supply-side of life… Because things are looking brighter for 2004 and that is a good thing for our country – even though it disproves their line of thinking.
Topics: Thoughts |
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Always Look on The Supply-Side of Life
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