Redstate

has a projected budget surplus. $300 million is a conservative estimate.

http://www.newschannel5.com/Global/story.asp?S=6482557

Republicans from my end of the state ran campaigns pledging to do something about lowering the sales tax on food. We shall see.

The governor is suggesting raising the tax on tobacco in order to provide more money for education.

I'm guessing they'll soon be at loggerheads.

Correct me if I'm wrong, but I believe that most states are flush with cash and running pretty large surpluses. I know Texas' runs in the billions.

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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman

The independents still have some respect for facts and there where we need to gain.

Look at the Rasmussen poll that showed 35% of democrats believed the president knew of 9/11 in advance and 25% were unsure. You can't talk to, reason with them. It's also not the best idea to say anything nice about the president around them.

They are alienating the middle and eventually we will be able to isolate them.
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"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777

I'll try again with that Bartlett link: http://www.realclearpolitics.com/articles/2006/03/bush_tax_cuts_dont_pay...

Thread.
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"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777

I'm hoping it will lead to people seeking good info rather than maintaining baseless, feel-good assumptions. And it's not a left-or-right issue. Conservative, supply-side economists agree with me regarding the revenue impact. If you check it out, you'll see. And as I said, legitimate arguments can be made for extending the Bush cuts. So why anyone would have a problem with what I've said is beyond me, unless the point is "don't tell me what I don't want to know". I would think you'd be glad to have the info I've provided. If I was making a case for a policy based on an assumption with which every expert disagreed -- even experts who are on my side in advocating that policy -- I'd be glad to be corrected.

Especially a broken record that thinks an appeal to authority is a substitute for an actual argument.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman

just ridiculous. OK, let's not concern ourselves with what economists say, even though there is a strong consensus on this question (revenue impact) even among supporters of the policy you favor (extending the Bush tax cuts). Instead, let's make an anecdotal observation, draw a general conclusion from it, and base our policy decisions on that conclusion. Yeah, that's smart. No need to look into it; just go with assumptions we feel better holding.

I challenge one economist to state unequivocally that he/she can prove 'where we are' on the Laffer curve? Just declaring it to be a myth doesn't make it a myth without proof. Given that every federal tax cut that I'm aware of has resulted in an increase in net revenue bolsters a possible reality that we remain still on the right side of that curve with further to move to the left. Call me an optimist; I say - PUSH THE ENVELOPE AND CUT TAXES SOME MORE! How else will we ever find out? The Europeans are certainly learning the hard way what the opposite brings them - hello Merkel & Sarkozy.

Additionally, I have no faith in CBO projections or people who cite them; the CBO's track record on projections is ...

Let's see, was it them, (or the GAO?), who dutifully responded to Bob Packwood's inquiry concerning the actual increase of revenue if tax rates for the prior year had been 100% - and then he asked them to project how much revenue there would be the next year at 100% and they returned a value greater than zero?

You state: "I challenge one economist to state unequivocally that he/she can prove 'where we are' on the Laffer curve?"

As I've said in other comments, just because they cannot be SURE, does not mean they -- and we -- cannot have some sense of PROBABILITIES. Almost all of our public policy decisions are based on assumptions that are educated guesses rather than certainties -- in other words, based on probabilities. Just because we can't be 100% sure of an assumption doesn't mean we shouldn't give great weight to the conclusions of the consensus of unbiased experts about what is highly likely (or highly unlikely). Agree?

As for your observations of correlations, if there were as clear a relationship as you claim in terms of strength of correlation and indications of causation (i.e, no spurious relationship involving a different causal variable), why do you suspect that virtually all the economists can't see something that is obvious to you? Do you suspect that they are all less competent than you in such analysis? Do you suspect universal bias, even among economists who favor the policies you do (tax cuts)?

doubt supply side economics. After all it has only worked every single time it has been tried.

"Nothing works like freedom, Nothing succeeds like liberty"
Kyle

You are misrepresenting what supply-side economics says on this question. It simply does not say that tax cuts always lead to higher revenues. And the Laffer Curve does not say that -- in fact it says that some tax cuts will lead to lower revenues.

One column you may wish to read, by Bruce Bartlett April 6, 2007. I don't agree with him that we should ditch the term "supply-side economics", but I understand his frustration and I think perhaps he was just trying to be dramatic with that suggestion.

AS one who was present at the creation of ''supply-side economics'' back in the 1970s, I think it is long past time that the phrase be put to rest. It did its job, creating a new consensus among economists on how to look at the national economy. But today it has become a frequently misleading and meaningless buzzword that gets in the way of good economic policy.

Today, supply-side economics has become associated with an obsession for cutting taxes under any and all circumstances. No longer do its advocates in Congress and elsewhere confine themselves to cutting marginal tax rates -- the tax on each additional dollar earned -- as the original supply-siders did. Rather, they support even the most gimmicky, economically dubious tax cuts with the same intensity.

The original supply-siders suggested that some tax cuts, under very special circumstances, might actually raise federal revenues. For example, cutting the capital gains tax rate might induce an unlocking effect that would cause more gains to be realized, thus causing more taxes to be paid on such gains even at a lower rate.

But today it is common to hear tax cutters claim, implausibly, that all tax cuts raise revenue. Last year, President Bush said, ''You cut taxes and the tax revenues increase.'' Senator John McCain told National Review magazine last month that ''tax cuts, starting with Kennedy, as we all know, increase revenues.'' Last week, Steve Forbes endorsed Rudolph Giuliani for the White House, saying, ''He's seen the results of supply-side economics firsthand -- higher revenues from lower taxes.''

This is a simplification of what supply-side economics was all about, and it threatens to undermine the enormous gains that have been made in economic theory and policy over the last 30 years. Perhaps the best way of preventing that from happening is to kill the phrase ''supply-side economics'' and give it a decent burial.

It's important to remember that at the time supply-side economics came into being, Keynesian economics dominated macroeconomic thinking and economic policy in Washington. Among the beliefs held by the Keynesians of that era were these: budget deficits stimulate economic growth; the means by which the government raises revenue is essentially irrelevant economically; government spending and tax cuts affect the economy in exactly the same way through their impact on aggregate spending; personal savings is bad for economic growth; monetary policy is impotent; and inflation is caused by low unemployment, among other things.

These beliefs led to many bad economic policies. In particular, they lay at the root of stagflation, that awful combination of high inflation and slow growth that bedeviled policy makers in the 1970s. Based on insights derived from the Nobel-winning economists Robert Mundell, Milton Friedman, James Buchanan and Friedrich Hayek, the supply-siders developed a new program based on tight money to stop inflation and cuts in marginal tax rates to stimulate growth.

As the staff economist for Representative Jack Kemp, a Republican of New York, I helped devise the tax plan he co-sponsored with Senator William Roth, a Delaware Republican. Kemp-Roth was intended to bring down the top statutory federal income tax rate to 50 percent from 70 percent and the bottom rate to 10 percent from 14 percent. We modeled this proposal on the Kennedy-Johnson tax cut of 1964, which lowered the top rate to 70 percent from 91 percent and the bottom rate to 14 percent from 20 percent.

We believed that our tax plan would stimulate the economy to such a degree that the federal government would not lose $1 of revenue for every $1 of tax cut. Studies of the 1964 tax cut showed that about a third of it was recouped, and we expected similar results. Thus, contrary to common belief, neither Jack Kemp nor William Roth nor Ronald Reagan ever said that there would be no revenue loss associated with an across-the-board cut in tax rates. We just thought it wouldn't lose as much revenue as predicted by the standard revenue forecasting models, which were based on Keynesian principles.

Furthermore, our belief that we might get back a third of the revenue loss was always a long-run proposition. Even the most rabid supply-sider knew we would lose $1 of revenue for $1 of tax cut in the short term, because it took time for incentives to work and for people to change their behavior. When President Reagan proposed a version of Kemp-Roth in 1981, every revenue estimate produced by the Treasury showed large revenue losses from its enactment, based on standard models. The independent Congressional Budget Office produced figures that were almost identical.

Moreover, we were adamant that only permanent cuts in marginal tax rates would stimulate the economy. We thought that temporary tax cuts, tax rebates, tax credits and such were economically worthless, and we strongly opposed them.
Today, hardly any economist believes what the Keynesians believed in the 1970s and most accept the basic ideas of supply-side economics -- that incentives matter, that high tax rates are bad for growth, and that inflation is fundamentally a monetary phenomenon. Consequently, there is no longer any meaningful difference between supply-side economics and mainstream economics.

There is no question in my mind that we never could have overcome the stagflation of the 1970s as quickly or with as little pain as we did without the supply-side idea. But supply-side economics has done its job, just as Keynesian economics did in the 1930s. Those who campaign as its champions are fighting a fight long won -- and it is time for supply-side rhetoric to go, with its essential truths embodied in mainstream economics and its perversions discarded for good.

"For the first seven months of this budget year, which began Oct. 1, revenue collections and government spending are at all-time highs."

I'm not arguing that tax cuts don't work, far from it, they work each and every time. I'm also not aiming to be the bearer of bad news, but the problem is our government continues to carelessly spend that additional revenue. Unlike the real world its not case of I have x dollars available to spend, its "last year I spent x dollars, well our budget should be 6% bigger so we have x dollars we MUST to spend" (applies if the funds are there or not). Let's for a second imagine how small, or nonexistant, the deficit would be if Congress showed just a little bit of spending restraint. Of course along with that maybe Congress could avoid using my SS and medicare tax to fund the highways, byways, dams, locks, indoor rainforests, STD studies, welfare and the like.

"Cowards cut and run, Marines never do"

Rather than try to provoke debate with people not actually participating ?
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"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777

Not sure what you mean. I'm saying that it's a myth that tax cuts like the Bush cuts generate higher revenues vs. what would be received without such tax cuts. Haven't I made it very clear that that's my point, and that proponents of extending the Bush cuts should not base their position on a myth but rather on other, more legitimate assumptions and arguments? What do you mean?

To what other people have said. I can provide links that say otherwise. We can see who can find more links but it doesn't prove much.

To have a discussion with you, we would need why you feel they don't behave as advertised. You have the freedom to form your own opinion give it a try.
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"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777

Ignore him. He's a circle j**k. Lots of questions and quotes no opinions or positive steps.

I really miss flyerhawk.
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Those who live by the sword get shot by those who don't.

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"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777

I have to laugh at that one. First, for you to think that one person can form a circle shows that you are geometrically-challenged. Second, the only "circle j**k" here occurs in the group that you and others like you form as you seek the comfort of surrounding yourself only with people who already agree with you completely on everything and avoid serious discussion with anyone who poses any challenge whatsoever to any part of any of your positions. (And I want to be clear that I'm not referring to RedStaters as a whole)

I loved reading his stuff.

I'm really not sure how you can say that. I stated my belief very clearly from the beginning: It is a myth that tax cuts like the Bush tax cuts generate higher revenue than the Treasury would otherwise receive (I think this is the third time I've said so, maybe fourth). I also stated that the basis for this belief is the overwhelming consensus among conservative, supply-side economists who say so (including Bush's own economists). I offered links and excerpts as evidence of the views of these economists (so no one has to take my word for it that these economists are indeed saying what I claim they are saying). I also challenged anyone else to produce an economist or two who contend otherwise -- which I still challenge you or anyone else to do. What's wrong with all that?

Its a myth because many people believe its a myth. This is called the bandwagon fallacy. The number of people who agree with a statement has no affect on the truth value of the proposition.

You are also using an appeal to authority. Because someone knows a lot does not affect the truth value of their propositions.

Both of these are exceptionally applicable here because of the politically charged nature of the proposition.

As a backstop to just the fallacy of the arguments in support of the proposition that tax cuts increasing revenue is a myth. I put forward the following.

1. Decreasing the marginal tax rate, decreases the economic return on evading taxes. I.E. it becomes easier to just pay your taxes instead of coming up with schemes to avoid them. The negative return of possible legal action overwhelms the benefit.

2. Decreasing the tax rate leaves more money in the pockets of the private sector. On their worst day brain dead crack addicts spend their money with greater wisdom than the government on its best day. This ensures that the resources money represents are actually being exchanged for items of value instead of being squandered. This allows greater resources to remain in the economy to be used for generating more resources.

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"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777

I agree with your statements #1 and #2, and I don't think many sensible people would disagree.

But it is absurd to contend, as you seem to be doing, that we should not weigh heavily the consensus opinion among conservative, supply-side economists on the relationship between tax cuts anregarding tax cuts and revenues. These economists generally WANTED the Bush tax cuts and WANT to extend them, so they have NO reason to skew their conclusions toward a drawback of such a policy (loss of revenue). It seems like you're saying, "Well, a lot of non-economists believe otherwise (based on unprofessional, unscientific observations), so it doesn't matter what all the economists are saying." I guess if a lot of people thought that the earth is flat, but all the scientists completely disagreed, you'd just say that consensus doesn't equal truth, so either belief is just as valid -- oh and we should go ahead and make important policy decisions based on the flat earth belief.

The observed results refute the contention.

Please provide a logical argument that can be evaluated, Referring to other people as having said differently does not hold water.

Feel free to appropriate one or more of their arguments.
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"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777

It is perfectly valid to cite experts in the field in any discussion, especially if the people involved in the discussion, in this case Joliphant and Brooks who may know economics to a certain degree, but that by no means know more about Economics than the experts cited.

A concensus of experts not driven by conflict of interest undermines the position of the person arguing against such concensus.

What is not valid is to cite say, Albert Einstein saying that Socialism is the best system, just because Einstein was an expert in physics, which is not related to the economy and government. In this case, a top economist would be a better choice than Einstein. But in this case Brooks is citing experts on the field.

How bout we just pull Einsteins opinion of Quantum Mechanics on the basis he created its theoretical foundations ? Given that he is so preeminent an expert we really don't need to evaluate the argument do we ?
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"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777

Are you suggesting that observing one or two instances of correlation (a) implies causation (the tax cuts caused the increase in revenues, as opposed to other factors) and (b) can be generalized as a rule? You can't possibly be saying that you or I drawing a conclusion regarding the effect of a tax cut based on one observation of correlation is as valid as the conclusions of economists who conduct serious analysis, looking at many data points and exploring many potential causal factors. If tomorrow is hotter than it was on the same date one year ago, do you conclude that global warming is taking place based just on that observation? Do you understand and appreciate the difference between serious, professional analysis of economic dynamics and anyone simply making an observation and then drawing a conclusion? Please stop and think about this. And if you haven't already read those excerpts and links, I suggest you do if you're interested in dealing with this question seriously.

As just a couple of examples:
"Federal revenue is lower today than it would have been without the tax cuts. There's really no dispute among economists about that," said Alan D. Viard, a former Bush White House economist now at the nonpartisan American Enterprise Institute. "It's logically possible" that a tax cut could spur sufficient economic growth to pay for itself, Viard said. "But there's no evidence that these tax cuts would come anywhere close to that."

Bruce Bartlett, supply-side economist who was domestic policy adviser to President Ronald Reagan and was a treasury official under President George H.W. Bush: How likely is it that the Laffer curve is causing revenues to rise, as opposed to normal operation of the business cycle? Not much, in my opinion.

Can we try to have a real discussion here in which everyone is actually interested in the best available information rather than being reflexively defensive of his/her starting position? Why is this like pulling teeth? I can see that you're intelligent, so I have to think there's some knee-jerk defensiveness going on here. There have been plenty of times on RedState in which someone brought information or an argument to my attention that I had not been aware of and that was compelling, and I gladly conceded those points. I'd rather learn something than spend my time defending my initial position just for the sake of doing so.

Isn't enough.

Just a hint Einstein has been proved wrong about QM by nearly a century of experimentation.
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"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777

Is that these guys never have to worry about being proved wrong on anything.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman

This proved my claim that it is valid to cite expert opinion in valid.

but sometimes it makes sense to put some stock into what the experts say. If a doctor told you had a heart attack would he have to explain his logic to you of why he knew this? In the modern world we can't know everything about everything, and we have to rely on expert opinion sometimes. You are absolutely right that authority does not prove anything, but it can give some pretty good evidence. You gave evidence on why tax-cuts could increase revenue, but you gave no evidence as to why these particular tax-cuts did this.
Obviously as the Laffler curve shows there is a point when tax-cuts do not increase revenue. We can't know the exact point of where we are on this curve, but it is important to pinpoint it as nearly as possible, we need to be able to approximately know how much money is coming into the government in order to avoid deficit.
I am open to the idea that we are on the point of the curve where tax-cuts will increase revenues. Personally, I would love to have a flat tax of 5%, but have yet to be convinced that the nation could afford this. I am open to going either way on taxes, but you Fiscal Conservatives are going to have to show me why we are where you say we are on the laffler curve. I imagine that knowing at what point tax-cuts pay for themselves involves some very complicated statistics and mathematics so I think that our best bet is to use expert opinion, but if you have another way to show me, I am open to it.
What I don't consider good evidence in and of itself is that the economy is doing better now; there obviously can be lurking variables. We like to say that the economy being good during Clinton's presidency and bad during the first part of the Bush presidency was because of lurking variables, but the economy being good now is a result of Bush, the Democrats like to say it is the other way around. This seems like fitting the facts to your ideology. I would rather have the data. However, I doubt whether I would be smart enough to figure out the hard data so I would tend to rely on the experts just like I won't try to figure why medicine I might take works, I leave that up to the Doctor.
Taxes are an issue I have not developed a complete opinion on. So, when I ask for evidence of your position I am not asking rhetorically. I am open to either side of this debate. My opinion is that taxes need to be high (or low) enough to pay for the GWOT, assistance to the poor and paying down the national debt. So please give me some evidence of your position.

Has a factual basis for making the claim that you've had a heart attack. It can be observed and tested for. He's not just throwing his opinion out there on something that cannot be known, as is the case here. It was Brooks who is making the claim that the tax cuts didn't pay for themselves, based on the opinions of a handful of guys he (or the Democrat talking points machine, anyway) selected for their opinions. I (and others) have said all along it is unknowable.

What we can reasonably assume is that the cost was at least partially offset. The Democrats won't even admit that much so who cares what the specific amount of offset is?
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman

I think that with statistics Economists can make a fairly good guess on the effect of taxes on revenue. You can look at what past tax-cuts have done and extrapolate what future tax-cuts will do. If there is no way to know the connections between taxes and revenue what do you propose basing tax rates on? As far as doctors basing their opinions on fact, science uses statistics and the rules of probability too. I am not saying that ecconomics has the ability to be as accurate as science, but see ecconomics is probably a better way to find accurate information than just using my opinion as a guide.

I think that with statistics Economists can make a fairly good guess on the effect of taxes on revenue.

Statistics are not some black magic where you can magically isolate one factor out of hundreds of thousands of factors in a extraordinarily complicated system and see what its effects alone were. There's no way to prove or disprove any claims.

If there is no way to know the connections between taxes and revenue what do you propose basing tax rates on?

Make them as freakin' low as possible? Works for me. I'm not interested in attempting to maximize the amount of taxpayer funds the government takes for its own purposes.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman

about deciding what is as "freakingly low as possible". All but anarchist would agree that zero taxes is too low, so how do you decide at what point you would be getting too litte revenue.

Does it really matter at this point? The size of government is not anywhere near where it should be, where it was in the past, or where the founders intended it to be. I don't think it is necessary to pinpoint an exact % of GDP at this point. We're not in danger of government being too small or anarchy reining in the US because of a lack of money being confiscated by the Federal government.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman

which support the government that we are actually going to have not one that you dream of having. The fact is I think that some conservatives ideas of how small government should be have as much chance of happening as a third party winning the presidency. We need to live with things the way they are not the way we wish they were. Sorry if that seems ridiculous to you.

You are the one dealing in ridiculous otherworldly hypotheticals. Remember, I'm the one that thinks any talk of determining when taxes are two low is a waste of hot air, because we will *NEVER* come close to that point in the real world. The best we can do is cut as much as we can, whenever we can. Heck, you could cut the size of the Federal government in half (never going to happen) and there would still be plenty to cut. At some theoretical point that we will never see, you'd have to stop cutting. How about when the Federal government can satisfy its constitutional obligations and ONLY its constitutional obligations?
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman

live in your dream world we can't just cut taxes without regard to the revenue that will be coming in to do so is to run dangerously high deficits and lead the nation towards bankruptcy something that I would imagine you are not in favor of even if do think we are running an unconstitutional government.

Once you admit you are just a leftist and not "Conservative," "Populist" or otherwise. The leftist view is the government gets paid first. That appears to be your view as well. The government needs money to pay for all the cool stuff it wants to do, then you can have whatever is left over.

BTW, if you are really concerned about "bankruptcy" you might want to compare our debt load as a % of GDP to other countries. Start with Japan. You would probably be surprised. And if you are still concerned about it, then the answer is cuts in spending, not increases in taxes. The problem is the government spends too much, not that it doesn't consume enough money. You aren't going to solve that problem by giving the government more money to spend.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman

See new thread below, with your name in subject line.

So yes when a doctor telss me something I absolitely demand to know the logic. Its especially true if you have good insurance. I once had a doctor recommend surgery for something I knew needed only 5% cortisone cream. I saw another doctor got my script and was hale in a week.

Theres a good healthcare PSA out know with tag line "questions are the answer" really good advice
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"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777

If I get five random expert doctors in a row giving me the exact same opinion that my leg must be cut off, and assuming they do not have motivation to lie, It doesn't matter what logic they give me. I won't waste my time googling the doctors' diagnosis hoping that a medical website that has not examined me directly might advise me that leg amputation is not the best answer.

My parents are both RNs and my dad's job now involves trying to make sure that the hospital does not get sued. So I understand the fallibility of the medical industry, but still I would take a what a large group of medical experts have to say over what I want to believe. Allmost everything in life involves having to get knowledge from those who know more than ourselves, to say otherwise is rather arrogant. By the way do you believe that there is a way to guess where we are as far more tax-cuts paying for themselves? If you do not believe that there is a way to be able to attach tax rates to revenue how do you suggest we decide our tax rates.

to cite experts.
Baseball, for example, is a simple activity compared to the economy or global warming.
I would not wait for Peter Gammons to tell me who he believes will win the World Series because many fans can easily match Gammons' insights.

But in the economy, citing experts is valid, although of course the discussion cannot just end there. We may agree with disagree with the experts, but a concensus has weight that must not be ignored.

The position advocated here is that after a tax cut, revenues would take an initial dive, but the cuts would cause an economic stimulus that would lead to higher revenues than we started from.

Seems to be pretty much what's happening, doesn't it?

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

No straw man at all. These economists are NOT just saying a temporary dip followed by a rise in revenues. They are saying lower revenues over the long term. For example, as shown in the excerpts in my previous comment (did you read them?), Gregory Mankiw, former Chairman of George W. Bush’s Council of Economic Advisors (currently economics professor at Harvard) concluded that:
In the long run, about 17 percent of a cut in labor taxes is recouped through higher economic growth. The comparable figure for a cut in capital taxes is about 50 percent."

As a note, a statement such as Mankiw's requires context related to tax rates prior to a cut (position on the Laffer Curve). I would only assume that he was speaking of the revenue feedback that would occur after tax cuts from rates roughly at current levels. (tax cuts from a starting point of, say, 80%, would have a higher percentage feedback effect)

that We claim tax revenues are higher than they otherwise would have been without the cuts.

That is not the stated position.

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

(1) Are you saying that the implication was NOT that revenues are higher because of the Bush tax cuts, or at the very least that tax revenues are not substantially lower than they would have been if those cuts?

Also, (2) what do you believe? Do you think tax revenues would have been much higher if the Bush tax cuts had not taken place (and our deficit would be much lower)?

When the tax cuts were proposed, most oponents said it would gut the treasury. We supply siders said it would stimulate the economy and after a year or two revenues would be higher than the starting point. The nice side effects include increased employment.

Frankly, I don't know what revenues would have been without the tax cuts and no one else does either. In order to know that, you'd have to know the exact amount of economic activity that would have occurred without the cuts. My own feeling is that we'd have entered a deep recession without the extra stimulus and it's possible that revenues would be lower now than they are. It's VERY likely that employment would have been lower.

But as I said, I don't KNOW what the revenues would have been without the cuts so I can't say if they would have been higher or lower.

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

First, point me to an economist that claimed back then that the Bush tax cuts would lead to higher revenues. As I've presented in my excerpts, Martin Feldstein, who wrote an op-ed in the Wall Street Journal to support Bush's tax plan (and his candidacy) in December 1999 and said "I estimate that such favorable feedback effects would offset about one-third of the traditionally estimated revenue loss from cutting the top tax rate to 33% from 39.6%."

It seems like Bush's current economists also believe what I am contending (see other excerpts).

To say essentially "Oh well, economists can't be SURE of the EXACT magnitude of the revenue feedback effect so anyone's guess is as good as anyone else's, so we should not give a lot of weight to the overwhelming consensus among economists as we consider tax policy" is highly irresponsible (in addition to defying common sense). I guess if you were in the White House you wouldn't have any economic advisors, nor seek the opinions of outside economists, as you shaped economic policy. If they can all tell you the same thing and you don't attach much weight to it, why bother?

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

You seem unfamiliar with either the concept of the Laffer Curve or its application to the rates that existed prior to the Bush cuts (i.e., what region of the Laffer Curve economists believed rates were in).

Oh, and to name Laffer as your example of an economist who predicted that the Bush tax cuts would increase revenues is beyond silly.

You asked me to name an economist who predicted the current situation. I did.

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

and quote to us what Laffer said about the bush tax-cuts.

handy. Can I borrow yours?

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

With 196,000 hits it's like sifting through a haystack, but I did find an interesting article written by Laffer.

The article is more of an overview of historical effects of many tax cuts rather than a pre-2003 prediction.

I particularly liked this quote.
"Seldom in economics does real life conform so conveniently to theory as this capital gains example does to the Laffer Curve. Lower tax rates change people's economic behavior and stimulate economic growth, which can create more--not less--tax revenues."

Please note that he is NOT saying "tax cuts pay for themselves" or "even the cuts will generate more revenues than the government would have otherwise collected", only that they can generate more revenue (which I have always taken to mean more than the starting point).

I was hoping to find some direct quotes pre-2003 that predicted the effects of the cuts, but the most promising looking links are for paid access sites.

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

.
Actually, I think the Laffer Curve IS saying that revenues WILL be higher than they would be otherwise if you're rates before the cut are high enough to be in the upper region. And I don't think anyone disputes that such a region exists. As an illustration (at the extreme), if the income tax rate were 90% and you reduced it to 80%, you're new tax rate is 8/9 of your old one, so to be hit break-even the tax base just needs to grow (eventually) to 9/8 of its old size (i.e., 12.5%). Given that you've just DOUBLED after tax earnings for every dollar earned at the top rate, it's perfectly plausible that you could achieve that growth and then some, generating higher revenues than you would have had otherwise.

I've read articles on the Heritage site and also emailed a bunch of times with a couple of their economists. They confirm what I've been saying: that the Bush tax cuts will most likely cause much LOWER revenues than what we would have had without the cuts.

I look forward to reading that Laffer article in more detail. Thanks.

revenue at some point. This is a point at which both higher rates and lower rates will result in less revenue. Unfortunately, no one is exactly sure where that sweet spot is (even Laffer from what I've read).

My own opinion is that the sweet spot moves with changing economic conditions as the economy adjusts to current rates. Note this is JUST a hypothesis and I haven't done enough study to solidify it beyond that point. If I were in graduate school studying economics, I might try to prove it for a thesis (well model it, I don't think you can really PROVE much in the dismal science). But I'm just an amature economist and don't have the time to do the research required.

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

One more question: (3) If the point of the post and concurring comments was NOT to imply that the Bush tax cuts have not caused substantially lower revenues than the Treasury would have recieved if the cuts had not taken place, what do you think WAS the point?

As I said, the Democrats claimed the cuts would slash revenues and drive never ending deficits. They didn't exactly get it right.

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

Well, I think that, given that no one ever claims to have a crystal ball regarding the economic cycle over several years to come, the point (at least among reasonable people) was probably that revenues would be much lower if the tax cuts were enacted than they would be without the cuts. I'll concede that there probably were many Democrats who were careless in this regard in their statements (I don't remember, but I assume many of them were). In any case, we have had large deficits every year that almost all economists contend have been much larger than they would have without the cuts (perhaps we would even have surpluses now to pay down some debt), and these deficits have added to a debt that, coupled with our unfunded entitlement liabilities, puts us in a really tough spot going forward.

As a note, if my recollection is correct, many Republicans said that the Clinton tax INCREASE would ruin the economy, but it was followed by a long, strong expansion. Do I conclude that the tax increase CAUSED the expansion -- no way. It was driven by other factors. And anyone who points to just one observation in that case and concludes there is causation (i.e., says the Clinton tax increase CAUSED the expansion) would be approaching the question just as sloppily as someone who concludes that the Bush tax cuts CAUSED the revenue increases just based on the observation of that correlation.

If we can actually share some humor, I recall a great political cartoon during the Clinton presidency, amid the economic expansion for which Clinton was taking credit. The cartoon showed Clinton and an aide looking out a White House window at the sunset. The aide says "That's a beaufiful sunset Mr. President." Clinton replies "Thank you."

The Democrats screech was far from the reasonable "well revenues might increase, but they'll be lower than they would have been otherwise". They cried about how terrible the "tax cuts for the rich" would be and they claimed government finances would never recover from the draconian cuts. They denied that revenues would even come close to catching pre-tax levels and claimed we should not try such a risky proposition. That doesn't align well with record revenues does it?

As to the deficits, yes they are higher. But the problem isn't on the revenue side.

But the revenues weren't really the point of the tax cuts anyway. The point was to get the economy back on track after the dual shocks of the Clinton economic bubble bursting and the drastic impacts of 9/11. The tax cuts seem to have succeeded here also! (And the Democrats were wrong about that one too)

Finally, maybe you should prove that revenues would have been higher today without the cuts than they would have been with them. I'd like to know the exact figures for economic growth and employment levels as well. Show your work.

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

Boy, it's like a full-time job correcting you and trying to get you to stay focused on the point of contention.

Did you read my comment. I conceded that probably many Democrats said what you claim they said. But you respond by saying I'm rewriting history. Good listening skills.

You say the problem of deficits isn't on the revenue side. The question we were discussing was whether or not revenues would have been much higher -- and deficits much lower -- if the Bush tax cuts had not taken place. Revenues minus Spending equals Surplus/Deficit. So, other things equal, lower revenues equals higher deficit (negative surplus). No need to conflate the question with the spending issue.

Re: tax cuts and 9/11, Bush first proposed his tax plan (at least the 2001 cuts, I believe) during the primaries while the economy was doing fine. He did so to ward off the threat from Steve Forbes, the tax cut king. He justified it by saying at first that we should give the surplus back to the people so it won't get spent by Congress. Then when the economy got shaky he said it was needed as an "insurance policy" for our economy. I assume the 2003 cuts probably did have the rationale of getting us out of recession.

As for your statement: "Finally, maybe you should prove that revenues would have been higher today without the cuts than they would have been with them. I'd like to know the exact figures for economic growth and employment levels as well. Show your work." Well, you're just being silly again. I've already explained in a previous comment why that argument is absurd.

The point I am making is the you can't give an accurrate (or even a close approximation) of revenues without knowing what the size and shape of the economy would have been without the cuts. There are no economic models that are that accurate. Most have far too many static values and far too few variables to be accurate. Making the statics into variables gives such a large range of predictions as to be meaningless.

You can say the revenues would be even larger without the cuts, I can say they'd be smaller, but the truth is neither of us really knows and neither of us can prove it. What I CAN prove is that we now have record revenues even with the cuts.

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

the government gets aproximations of how much revenue is coming in, otherwise I don't know that they would have things like the CBO and such. Sure these are all just estimates, prone to error. But in my opinion we need to error somewhat on the side of paying down the debt, and I am not for cutting funding for the GWOT, nor for assistance to the poor.

I can't always justify the time to correct you on every point, so let me just point out something fundamental that your missing about what economists do: Even though they can't predict the value of every independent variable and, in turn, the value of the dependent variable, they can often determine the direction and rough magnitude of the effect the independent variable will have on the dependent variable, OTHER THINGS EQUAL (ceteris paribus). If you don't understand what I'm talking about, read this http://en.wikipedia.org/wiki/Ceteris_paribus

Look, microeconomics is different from macro, but just as an example, I'm a mangement consultant, and some of my work involves pricing analysis. I can't predict with certainty that if a client lowers his/her price by X% that sales or market share will go up in a given time period by Y%, partly because there are other factors (competitor price changes or other moves, marketing efforts & effectiveness, etc.) but if I have good pricing data and other good info, I can often give a client an educated guess as to how the price decrease will affect sales or market share OTHER THINGS EQUAL (and I can go beyond that to consider the possible future conditions of those other things and their impact, but that's beside the point).

subject and I tend to agree with you, but you need to cut out the condescending tone. The "I'm having to waste time setting you straight" attitude needs to go. At least the person you are responding to you took you seriously enough to respond. If you remain condescending that will stop. I understand frustration when people tear apart your ideas but sometimes when you are in the minority you have to have a different tone.

Thanks. In general I try to be at least as civil and respectful as the other person (and very often I have some of the worst stuff hurled at me) and usually more so, but it's possible I haven't done so in this case, so thanks for pointing that out. I think you're one of the most sensible people I've come across in my short time so far on RedState, and I take your opinion and advice seriously.

If my tone has been disrespectful, I apologize. It's a little carry-over from the animal rights debate in which I had/have doubts about your making a good-faith effort to have a real discussion, but it is wrong for me to presume that you weren't making such an effort.

the rules you want to use. I won't construct the straw men you want to beat down for you.

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

There's no such thing as "Other things being equal" in s dynamic economy. You can't just fix the employment numbers and say "other things being equal" a higher tax rate would give higher revenues. Yes, that makes it nice and easy to build a model, and if it were true you'd be correct.

BUT, tax rate changes have other direct and indirect effects. One of the direct effects is that people have more money to spend. This in turn creates an indirect effect that businesses have more revenue caused by more demand for their products. Which has an indirect effect that they hire more people. Which causes an indirect effect that more people have money to spend (and pay more taxes). Which has an indirect effect that companies have more revenue (and pay more taxes). Which has the indirect effect that they need to hire still more people. Which has the indorect effect that wages rise (and more taxes). And there are hundreds of other indirect effects occurring as well.

I can predict the direction of changes resulting from a tax rate cut, but not the magnitude.

You kind of hint at that in your refernce to your real job, but then say it's beside the point. In fact it IS the point. The real world doesn't allow you to fix your variables.

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

You're misunderstanding the concept of static analysis and you're misunderstanding the concept of "other things equal" (which are NOT the same at all), but I'm going to have to leave it at that.

to reach your conclusion. If the economy outgrows the initial differential reduction in revenue from the lower tax rates, than yes, tax cuts do cause increased government revenue as an indirect and less important effect.

>>>>was probably that revenues would be much lower if the tax cuts were enacted than they would be without the cuts.

Only if you go on the assumption that people will not invest or spend the money they get to keep after the tax cuts. The US GDP (using real, not nominal $$ was 5.1($T) in 1980. It was 11.1($T) in 2005.

That is it expanded by about 0.24($T) a year on average. Since the tax cut of 2003, the GDP went from 10.3 ($T) to 11.1 ($T). That's a real $ expansion of 0.4 ($T) a year. The economy has grown at a rate 0f 160% it's previous mean rate since the Bush tax cuts.

So the first-order cause of the increased revenue is increased economic growth. Now you have to convince people that the the economy would have grown at 160% the usual rate after 2003 without the tax cuts to rationally make your argument. In other words, convince me that something else was out there that would have catalized that growth without the increased amount of spendable income, being put in the hands of consumers, by the reduction of their Federal tax burden.

END

thanks for stimulating the discussion. There is some merit to the claim that tax cuts don't pay for themselves at the levels we're at, although the revenue gains the last couple years have been quite impressive. You should probably make a separate post with all these quotes.

80% is definitely too high for maximum tax revenue in the long-term. I think you could make an argument that the max of the laffer curve is anywhere between 20% and 70%.

Thanks. Maybe I will post it, but I'm catching enough flak just by presenting this important info here. I'm glad some people are seriously considering it. I think a true fiscal conservative (a) is first and foremost fiscally responsible and (b) diligent about basing policy on the best possible information rather than believing what just feels good to believe. Others are just FCINOs (Fiscal Conservatives In Name Only). Yeah, I just made that up, for whatever it's worth.

I don't know where the max point would be on the Laffer Curve today. Of course, it would differ for capital gains vs. labor income, and for labor income we'd probably be focused mostly on the top marginal rate, but the lower brackets would also have an impact. I came across an economist's estimate/guess recently regarding the revenue-maximizing cap gains tax rate, but I don't rememeber what it was. Anyway, the one thing economists agree on now is that we are nowhere near the region of the Laffer curve in which tax cuts will increase revenues, or come anywhere close to breaking even, and I wish pundits and politicians would stop perpetuating that myth (and other Americans would not resist information contrary to the myth, even though it's a feel-good, "have your cake and eat it too" kind of myth).

Just an aside: It would be good to know what the rate was that would yield maximum tax revenue, but that does not mean the tax rate should be set there. The government should not have a goal of taking in as much revenue as possible. tax rates should be at the minimal level necessary to sustain functionality.

If what you mean is that the _publicly-held_ national debt (leaving out inter-agency IOUs) is the key number rather than the total national debt, you are absolutely right. Is that what you are referring to? Also, I would add that the debt-to-GDP ratio is more important that the debt figure per se, because the former is indicative of our ability to finance the debt and how much doing so will harm the economy and crowd out other budget items (it also ultimately impacts long-term interest rates, other things equal, and the value of the dollar, although I don't claim expertise in those areas)

It only looks like we have a small deficit because SS is taking in more money than it's paying out. That extra money shouldn't really be included in the budget figures because Congress should be saving that surplus and not using it to fund other projects. Our budget situation is worse than it appears and we should be honest about this. It makes it easier for Congress to propose new programs when the ignorant electorate thinks we're making enough money to cover our expenses.

You are absolutely right about the debt/GDP ratio. This is the number that should be thrown around in articles, not the total debt. As long as the debt/GDP ratio is declining (which can happen even if we're running a budget deficit) we're doing ok.

Nobody here said that tax-cuts don't help the economy. The question is whether they do so enough to offset the cost. If tax-cuts cost money than that is not neccesarilly an arguement against them it just says that we need to cut spending in order to avoid deficits. Just because we did not work on paying down the debt during the Clinton years does not mean that we shouldn't have.

Right. The only thing worse for us today than tax-and-spend is more borrow-and-spend. Unfortunately, if we are going to avoid big tax increases we are going to have to scale back significantly on entitlements (Medicare and Social Security) in terms of eligibility and/or benefits (cutting out pork like bridges to nowhere is nice, but won't put a dent in the problem). And politicians are not in a hurry to propose such changes to entitlements (they fear seniors and the AARP). That's why we need a non-partisan commission to provide political cover before it's too late. http://www.redstate.com/blogs/brooksrob/2007/may/01/providing_cover_for_...

need higher taxes than what conservatives want. However I am open to being enlightened on how the bush tax-cuts helped to raise revenue, but so far nobody is willing to engage in that arguement.

I think you're looking for info from someone arguing the other side of this question, but if you don't mind, I'll try to provide some useful info. Like any tax cuts, the Bush tax cuts were stimulative of the economy (other things equal), increasing incomes (by providing more incentive to work, invest, and shelter less income) and expanding the tax base (the income to which the tax rates are applied). So there is some "revenue feedback effect", some recovery of revenue vs. the loss we'd have if there were no stimulus. As a note, some of the cuts were considered more stimulative per dollar than others, and we're really talking about two sets of tax cuts, 2001 and 2003. (If you're interested, considering this feedback effect is called "dynamic analysis" and ignoring it is called "static analysis" and it's always good to know which someone is referring to when they talk about revenue impact of tax cuts or increases. Static analysis inherently overstates the loss to the Treasury from a tax cut and overstates the increase from a tax increase, and it's just used -- or should be just used -- as a reference point before debatable assumptions regarding feedback effect are introduced, but Democrats sometimes exploit it to create a false impression).

Anyway, so the Bush tax cuts almost certainly had a stimulative effect. Pretty much every economist agreed before the cuts and agree now that the revenue effect would not be, and has not been, sufficient to come anywhere close to generating as much revenue as the Treasury would receive without these cuts. But there are many other factors in the performance of the economy, including the nebulous, fairly unpredictable "economic cycle" and major events like 9/11, the dot-com bust or an oil shock (or the lack of such negative events). Economists overwhelmingly agree that these other factors, as a whole, account for the revenue increases, even if they can't necessarily lay out (or agree upon) exactly how much each of these other factors contributed to the revenue increases.

I hope that helps, and I hope I didn't tell you too much that you already knew. Let me know if you have any questions.

case that the Bush tax-cuts did not pay for themselves, though if I get over my laziness I suppose maybe I will try to do some research on my own. I guess what I really tend to wonder is what the tax-rate would need to be to maintain national security, adequate assistance to the poor, and pay down the national debt. I am interested in these things in making my decision for 2008. Come to think of it though the neccesary tax raate will always change so what I need to find is a candidate who agrees with me on these principles and who I trust on these issues.

Good luck finding a candidate who will be honest about the sacrifices we will have to make to prevent a fiscal meltdown in a decade or two. Not to keep plugging my idea, but http://www.redstate.com/blogs/brooksrob/2007/may/01/providingcoverforfiscalresponsibility

Typicall, the Democrats (not that you'll be considering one, I assume, but just to cover the bases) want to spend too much, and the Republicans want to tax too little relative to revenues (I'm bolding that part so knives don't literally spring from my computer screen toward me). And that's a better formula for each for winning their respective nominations and the general election, because people don't want to hear bad news, as evidenced, perhaps, by some of the reisistance to information exhibited by some in this discussion.

I agree with protecting funds for GWOT and Defense generally as a priority. We're going to have to take an axe to most other things, though, and it's going to hurt a lot more than just cutting out some "bridge to nowhere" or other pork.

For further learning, I highly recommend the website of the non-partisan Concord Coalition http://www.concordcoalition.org/ and this book http://www.amazon.com/Running-Empty-Democratic-Republican-Bankrupting/dp/0312424620/ref=pdsimb_1/104-3262197-2819968

I'll try again with the links that didn't work:

Excellent book:
http://www.amazon.com/Running-Empty-Democratic-Republican-Bankrupting/dp...

My post: http://www.redstate.com/blogs/brooksrob/2007/may/01/providing_cover_for_...

There are plenty of benefits to tax cuts. My point is that higher revenues is not one of them, and that that myth should be chucked as a justification, and we should focus on the real benefits, and weigh those benefits against the strong likelihood that they will add to our debt and probably increase our debt-to-GDP ratio, which, given our current situation, means that tax cuts today mean either large tax increases in the future and/or severe cuts in entitlement (Medicare and SS) benefits and/or entitlement eligibility along with severe cuts across the rest of the budget -- and I mean way beyond pork. Economists of all stripes agree on that. Remember, it's the people's money, but it's also the people's debt -- and by the way, 44% of the publicly-held debt is owned by foreigners, including large amounts by foreign governments including the People's Republic of China (comfortable with them having leverage over us?). And of course, the higher the debt, the higher the interest expense that has to come out of our tax dollars and gives us no benefit.

I really don't need advice from a lefty troll on what it is to be conservative. The term "fiscal conservative" has been co-opted by the left to describe anyone who fights for increased spending and increased taxes to go along with it. The "fiscal conservative" holy grail here would be some kind of automatic tax increase every year so there was never a Federal deficit. Wouldn't that be grand?

You can claim that starving the beast doesn't work, so how well does feeding the beast work? Have increased tax collections in the past convinced governments that they are spending too much money and need to make cuts to spending? Do you have some examples of this? There's 100 years worth of tax increases to look at, so there's no shortage of data.
---
Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman

Do you believe that tax cuts generally lead to higher revenues?

Actually, I just checked your previous comments. Sounds like you're saying we just have no idea if tax cuts (starting in the neighborhood of current rates or rates prior to the Bush cuts) generate higher revenues, equal, or lower revenues. Is that what you were saying?

First, let's make clear that you and I are now discussing an entirely different question than the question of tax cuts generating higher revenues (or not, as the case actually is).

Now onto "starve the beast". I did NOT say "starve the beast" doesn't work. I basically said that it's quite possible that it doesn't work (in other words, it's plausible that it doesn't work, but I wasn't saying I had reason to believe it is certain or highly likely that it doesn't work -- because I didn't, and still don't, have enough info from experts).

I base that statement ("quite possible it doesn't work") on two things. One is intuitive: If people can get things on credit, they may be more likely to buy more. Same with government -- if taxpayers don't feel the pain of spending (because it is being financed by borrowing to cover deficits) they may not care as much about high spending. The other is my recollection from several months back that a prominent economist had concluded the opposite correlation (tax rates correlated NEGATIVELY with spending -- i.e., inverse relationship, with tax cuts leading to higher spending). Of course, one economist is not a consensus. I checked it out and here's what I found.

A debate emerged among some economists after this piece by William A. Niskanen of the libertarian Cato Institute www.Cato.org (If you don't know, believe me, the Cato guys hate taxes as much as anyone) http://www.cato.org/pubs/policyreport/v26n2/cpr-26n2-2.pdf According to the Cato Institute web site, Niskanen has been chairman of the Cato Institute since 1985, following service as a member and acting chairman of President Reagan's Council of Economic Advisers. Niskanen has served as director of economics at the Ford Motor Company, professor of economics at the University of California at Berkeley and Los Angeles, assistant director of the federal Office of Management and Budget… Niskanen holds a B.A. from Harvard and a Ph.D. in economics from the University of Chicago. The University of Chicago recently honored him with a lifetime professional service award._ (In case you don’t know the reputation of the Chicago School, let’s just say they don’t preach communism. It is famously pro-free-market)

Niskanen concluded that tax cuts led to HIGHER, not lower spending. Now, supply-side economist Gregory Mankiw, who was Chairman of W Bush’s Council of Economic Advisors and is an economics professor at Harvard, noted that another prominent economist reached the opposite conclusion, with some differences in methodology (with perhaps some advantages), albeit with less recent data vs. Niskanen's analysis. Mankiw concluded that the jury is still out on which is correct -- it's just not clear if "starve the beast works" (i.e., if tax cuts lead to lower spending). http://gregmankiw.blogspot.com/2006/06/starving-beast.html

I would add to the above that the last several years are hardly indicative that tax cuts even prevent huge spending growth, let alone lead to spending reductions.

Second try with that Niskanen link:
http://www.cato.org/pubs/policyreport/v26n2/cpr-26n2-2.pdf

ok, third try
http://www.cato.org/pubs/policy_report/v26n2/cpr-26n2-2.pdf

fall under, but please explain to me how you can describe someone that is pro-life, in favor of privatizing education and social security, Is in favor of the GWOT, and is in favor of the war in Iraq gets classified as a leftist. I will admit I agree with liberals on some econonmic issues, but how does that make me a leftist if I am conservative on all the other issues. How is that disagreeing with one conserative principle makes me a leftist when I disagree with even more liberal principles? How does disagreeing with all these liberal principles not make me a conservative by the same token that disagreeing with the conservative principles makes me a leftist.
The reason I call myself a Populist Conservative is becasue I am moderate on the ecconomic issues ( since I am in favor of such things as privatization of social security, I don't see how you can call me a leftist) and solid conservative on social issues. Like it or not their are a fair number of my kind in the Repulican party, even the president is for bigger government, do you consider him a leftist?

Given your background and your apparent implication that the relationship between tax cuts and tax revenues that you found still holds today (Is that your implication?), you should have no problem pointing me to a couple of economists who have written that tax cuts from roughly the rates we have today or the rates prior to the Bush cuts are likely to generate higher revenues than the Treasury would receieve without the cuts, so please send a couple of links.

As a note, if you were looking at data back in the early 70s, it's possible that the top marginal tax rates then were so high that they were on the region of the Laffer Curve in which tax cuts generate higher revenues. I don't know if that's the case or not.

I would point out, though, the following statements by Bruce Bartlett that appeared in National Review. Bartlett was and is a supply-side economist who was a domestic policy adviser to President Ronald Reagan and was a treasury official under President George H.W. Bush.

BRUCE BARTLETT
From National Review online, March 5, 2003:

The Laffer Curve is correct in theory — it simply shows that at a 100% tax rate or a 0% tax rate no revenue is collected. Every economist knows that this is true. But of course, we are nowhere near a 100% tax rate — nor were we in 1981 — such that one could expect an across-the-board reduction in tax rates actually to raise revenue. Ronald Reagan never said so, nor did any other responsible economist.

It is often alleged that Ronald Reagan played such a trick on the American people in 1981 by saying that the big tax cut that year would not reduce federal revenue. This is nonsense. The Reagan administration always said that the 1981 tax cut would lose large revenues and its estimates were comparable to those made by independent analysts.

Furthermore, supply-side economists who made private estimates of the revenue impact of the Reagan tax cut — estimates that did incorporate growth effects — also showed large revenue losses. For example, an estimate by economist Norman Ture of an early version of the Reagan plan showed large net revenue losses even 10 years after enactment. Economist Michael Evans came to similar conclusions.

Disregard the asterisk after "2003". Just a typo.

You've got to be kidding. Sorry, I'm just out of patience with people who have such disdain for experts that, even if the experts overwhelmingly agree on something, ridicule people who give that expert consensus a good deal of credibility, and think that a conclusion is more valid if they, as non-experts, make a few observations or conduct some unprofessional analysis and draw their own conclusions. Do I have to go do my own correlation analysis based on data I think are appropriate and complete in order to feel reasonably certain that heavy, prolonged smoking of cigarettes increases the risk of some types of cancer?

Sorry for my tone, really. I'm just a little frustrated with this odd attitude. Where does it come from??

Actually, I should be more precise. These people have disdain only for experts whose conclusions contradict beliefs that these people feel good maintaining, and only ridicule people who pay attention to those experts.

However, since you asked where 'this odd attitude' comes from, perhaps you should try looking in the mirror. You've come across awfully d*** condescending this whole thread, and you still don't understand that an appeal to authority isn't automatically a winning argument-- especially in economics, where the old joke is that you could lay 100 economists end to end and still not reach a conclusion.

Just look at how you came across back to longwalker, above. He's dealt with the actual data, whereas you're just quoting others, yet you're still talking to him like you're the teacher and he's the pupil.

---
Internet member since 1987
Member of the Surreality-Based Community

Louis XIV showed greater humility. He's got an obnoxious attitude, and may even know a thing or two about his topic that he didn't read on Wikipedia. Beyond that, I've seen absolutely nothing to suggest he has anything going for him.

As for his content. His reliance upon static scoring and his underestimation of second order perturbations in money supply are intellectually suspect. It reminds me of a math nerd I heard ragging on some economists he had to work with on a project.

Ceteris Parabus - Latin phrase meaning. "They didn't teach me how to solve differential equations in High School Algebra Class."

END

Because you have been kicking their butts on this site for several days, and you have had the (gasp!) temerity to reflect back about 10% of the condescending attitude that they give you when you challenge one of the core beliefs here-Namely that "All tax cuts are good, and all tax increases are bad".

I made one prediction at the beginning of this and it has been borne out in full.

You can argue with theories, you can argue with arguments, arguing with appeal to authority is pointless.

You want to try the counter of the argument that without those tax cuts we would have been in a depression ?
______________________________
"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777

Funny thing about those taxes, I never witnessed any increases that helped the economy and I never witnessed any cuts that hurt the economy but, they keep telling us that it MIGHT happen someday.

"Nothing works like freedom, Nothing succeeds like liberty"
Kyle

Tax increases in targeted areas could be more beneficial to the economy than imposing government regulations. However, since that's not really what's being proposed by the Dems, the argument basically stands.

That being said, even if you are a supporter of pigovian taxes, you have to accept that their primary purpose is to reduce a negative externality, not to generate revenue.

"To all those whom I have not yet offended: Please stand by, and I will work to remedy the situation as soon as possible."

Patiently waiting for a Fred Thompson / John Engler ticket.

some taxes are more harmful than others, as Mankiw correctly points out. But I am just referring in general to the idea that tax RATEs be kept low. That is always a benefit to the economy. Of course if the government just spends and inflates then that can be harmful, but often not having the money poses at least some restraint, Whereas if they gain a new revenue stream, they will not use it for let us say, retiring debt, oh no! they will just spend more.

"Nothing works like freedom, Nothing succeeds like liberty"
Kyle

I'm not talking about tax cuts helping or hurting the economy overall (that is a separate question which, of course, is worthy of debate), my point relates to the impact on revenues, and specifically to the myth that some are clinging to that tax cuts from rates that existed prior to the Bush cuts are likely to generate higher revenues than would be received without such cuts. And on that point, Mankiw is just one within the overwhelming consensus of conservative, supply-side, pro-tax-cut economists who hold the belief I have represented here. They still advocate tax cuts, but they do so on legitimate grounds, and their views on the revenue impact are based on serious, thorough, professional analysis, not based on conclusions drawn from some simple selection of a few points of correlation by a non-economist.

I guess I would just ask why a layperson (with respect to economics) would make a few observations of correlations (and even those may be conveniently selected) and give greater weight to a conclusion he/she draws from those observations than to the nearly universal conclusions of prominent economists who have much greater expertise, much greater resources (information, analytical tools, etc.) and no reason to be biased (because they generally ADVOCATE these tax cuts, albeit for reasons other than the myth that they will increase revenues). Furthermore, if one chose not to assume that all the experts were at least MORE LIKELY to be correct than the opposite view, and if this opposite view happened to be a view that was emotionally more comforting to him/her, why wouldn't that he/she step back and question one's objectivity.

To be clear, this question isn't asking whether or not one should take the consensus view of economists on this question as a certainty, but rather why one wouldn't at least consider their view much more likely than the opposite view. That's the mentality that seems to be exhibited by some in this discussion (not necessarily you) -- "Economists can't be certain, and I've made a few observations that lead me to a different conclusion, so even though all the economists, including all the economists who advocate the same policy as I do (and therefore have no reason to draw conclusions that represent drawbacks to such a policy), say one thing, I'm going to assume my own conclusion is probably more valid." What is unstated is that this person's conclusion happens to be the conclusion that feels better emotionally to him/her because it provides more support for the policy he/she advocates rather than representing a trade-off of costs vs. benefits, and because it means essentially we can have our cake and eat it, too (lower taxes AND higher revenues).

other reversed. I think you meant to say:
"that lowering the tax rate . . .decrease tax revenue . . . raising the tax rate . . . increase tax revenue."
But I don't want to put words in your mouth that you didn't intend.

And can you also use the "reply to this" button?

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

How about the increase in revenues following the 1993 tax increase? http://www.heritage.org/research/features/BudgetChartBook/charts_R/r2.cf...

But the chart is small and it's a little hard to see the dates and I could be off a year one way or the other.

But Clinton's economy had the benefit of the internet boom with gains in both real and immaginary companies (not to mention the false gains from companies like Enron and Worldcom).

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

You write:
"But Clinton's economy had the benefit of the internet boom with gains in both real and immaginary companies (not to mention the false gains from companies like Enron and Worldcom)."

Exactly my point regarding the difference between correlation and causation (particularly when looking at just one of just a few data points). There are factors other than tax rates that have a great affect on GDP and the tax base. That's why the increase in revenues since the Bush tax cuts can't be taken as proof that the tax cuts CAUSED the revenue increases. Agree?

We have theory and results that match the theory.

Not nearly the same thing as PROOF. You can't do an absolute proof with the number of variables involved and static or only partially dynamic models don't give PROOF. As I mentioned above, I don't think there's very much that has absolute proof in economics. Otherwise there wouldn't be such disagreement over very basic pricipals.

Can we at least agree that it's POSSIBLE that the tax increases were the primary stimulus that caused the increased economic activity that caused the increase in revenues?

(And yes, I'll conceded that other inputs such as Fed action have also contributed.)

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

First, did you like that Clinton joke (description of the cartoon) I put in a comment yesterday? I thought that would be something we could agree on.

You state that "We have theory and results that match the theory." Actually, we have neither. The Laffer Curve only says that it is POSSIBLE for tax cuts from rates that are sufficiently high to generate higher revenues, but says nothing about whether or not the rates prior to the Bush cuts were in that region. And we don't have "results that match the theory", but rather a mere observation of one point of correlation. And the Laffer Curve is actually just common sense and simple algebra, so I'm not sure really why anyone needed a guy to draw the graph on a napkin, which is the legend as I recall. I think you, I, or anyone would say that, at the extreme high end, it's possible that rate cuts can produce higher revenues, and calculating how much growth of the tax base would be necessary to be revenue-neutrual would require only simple algebra.

Re: your question, of course I can't say it's impossible, but it seems highly improbable that the Bush tax cuts have CAUSED the revenue increases. And yes, I base that opinion on the consensus of every supply-side, pro-tax-cut economist whose opinion I could find online (a few months back when I researched this question), including Bush's own economic avisors and Treasurer, Bernanke, Greenspan and others who have great expertise, great resources, and who have, if anything, an incentive to be biased in the OTHER direction from the conclusion they have drawn. If you haven't yet, check those excerpts in my previous comment(s). I'll paste just one again here:

The Washington Post, October 17, 2006
"Federal revenue is lower today than it would have been without the tax cuts. There's really no dispute among economists about that," said Alan D. Viard, a former Bush White House economist now at the nonpartisan American Enterprise Institute. "It's logically possible" that a tax cut could spur sufficient economic growth to pay for itself, Viard said. "But there's no evidence that these tax cuts would come anywhere close to that."

Economists at the nonpartisan Congressional Budget Office and in the Treasury Department have reached the same conclusion. An analysis of Treasury data prepared last month by the Congressional Research Service estimates that economic growth fueled by the cuts is likely to generate revenue worth about 7 percent of the total cost of the cuts, a broad package of rate reductions and tax credits that has returned an estimated $1.1 trillion to taxpayers since 2001.

Robert Carroll, deputy assistant Treasury secretary for tax analysis, said neither the president nor anyone else in the administration is claiming that tax cuts alone produced the unexpected surge in revenue. "As a matter of principle, we do not think tax cuts pay for themselves," Carroll said.

OK, you're turn. You state that you don't believe that the stimulus caused by the tax cuts caused the growth that lead to record revenues.

What DID cause the growth?

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

I don't know. And I would expect that economists would have at least some disagreement as to the relative contributions of various factors. There is always the nebulous, hard-to-predict "business cycle" the timing and pattern of which is often not very controllable through tax policy (although tax policy can play a role). And there are plenty of more specific factors I'm not sufficiently versed in to list.

You don't know and yet you're nearly certain the tax cuts had very little to do with it.

OK, I'll accept that. It's actually pretty typical of an economics discussion.... it usually is strongly biased by the personal beliefs of the person making the argument and in the end, the answer is "I don't know".

I'll even grant that I don't 'know' as well. I have a belief based on observations meeting the expectations I had from before the cuts were implemented.

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

Just because I can't tell you what DID cause it doesn't mean I can't say something in particulary probably DIDN'T cause it. I mean, I can say that the money I spent on my vacation a few years ago was probably not the cause of the rise in federal revenues. The fact that I'm not sure what did cause it does not mean I can't make that statement.

position.

You put up a good fight against low tax rates having anything to do with it, but I'd suggest you keep a more open mind until you do have a good theory of what did cause it.

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

So should I keep an open mind about the possibility that my spending on my vacation a few years ago may have caused the increase in federal tax revenues? I'm not trying to be sarcastic for the sake of attitude. I'm just pointing out again that one can consider something an unlikely cause even if he can't identify the main cause(s). See what I mean?

I tend to agree with your vacation theory... unless you're Bill Gates and you spent you're entire fortune on it. 8*)

But there is a reasonable probability that the tax rate cuts had an effect that caused improved economic growth (even if not the primary factor as I believe). You clearly don't believe it did, and I clearly do. But beliefs aside, it's in the realm of reasonable posibilities. Keep an open mind.

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

My mind is open.

If new information came to me that seemed credible and challenged the consensus among economists, you bet I'd consider it. But that's different from considering a contrary believe just because someone holds that belief with no substantial evidence behind it.

And as I've said, I -- and all these economists -- can't be SURE that what I'm saying is true, but as we decide our policy preferences -- particularly on such important matters -- we need to focus on PROBABILITIES, so (not to be a broken record -- and by the way, to teenagers these days know what that expression means?) if I have, on the one hand, near universal agreement among economists on one conclusion, based on serious, unbiased, professional analysis, and on the other hand, conclusions drawn by some non-economists based on a few observations of theirs, to me it only sensible to attribute much more credibility to the former, even if they can't be CERTAIN of their conclusions. Would you agree?

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

A lowering of the tax rate will result in increased tax revenue while raising the tax rate will result in a decrease in tax revenue.

In the private sector, when we want to increase sales revenue, one of the first thing we try, is to lower the price. An executive that suggested a price increase to raise sales revenue would not last long in any private sector company but, in government service, could end up the head of the World Bank.

That's not what the Laffer Curve is saying. It is saying that if the tax rates prior to the cut are high enough, cutting them can generate higher revenues, but if those starting rates are not high enough, cutting them will result in lower revenues. And in some of the excerpts from economists I've quoted, they refer to their strong belief that we are nowhere near that higher region of the Laffer Curve, nor were we prior to the Bush cuts.

As for your private sector pricing example, you're incorrect. The impact of a price change on revenues can be either positive or negative, depending on the price-elasticity of demand. If I raise my price from $10 to $12 and my volume only decreases by 5%, my revenue will go UP by 14% (0.95 X 1.2 = 1.14), but if my volume decreases by 25%, my revenue will go DOWN by 10% (0.75 X 1.2 = 0.9).

by looking at a couple of trees. The federal government and it's huge morass of worthless programs and gold platted entitlements has become too large. Inefficient programs and agencies need to be eliminated - both tax collection as well as spending need to be cut. Notwithstanding the academic arguments put forth here, taxes need to be cut because government has become too large and it's programs too burdensome.

====
"Enlightened statesmen will not always be at the helm." -- James Madison

Not missing any forest. I've said from the start that legitimate arguments can be made in favor of tax cuts, but that higher revenues is not one of them. I just want to try to stop that "higher revenues" or "tax cuts pay for themselves" myth from continuing to circulate because it keeps the nation from weighing the real pro's and con's.

When you say "taxes need to be cut because government has become too large and it's programs too burdensome", it sounds like your putting forth the "starve the beast" argument. As I've presented, it seems like economists are divided on whether or not "starve the beast" works (i.e., that tax cuts force lower spending), and recent years certainly don't support the contention that they do, so it's a big gamble to cut taxes first and then hope spending comes down, given the fiscal situation and outlook we already face (debt-to-GDP, unfunded liabilities, declining worker-to-retiree ratio).

Once you've been here a while longer, people will get to know you somewhat and then you're allowed more slack. I've knocked heads with more than one moderator here, but not until after I'd been here a while. A large percentage of the new users that are obnoxious are actually trolls and/or mobys and thus don't survive long. Others have their pet bloggyhorse that they can't help but find a way to bring up in every thread. Once you can distinguish yourself from them, you'll get along here better.

---
Internet member since 1987
Member of the Surreality-Based Community

Thanks. I don't even know who the moderators are (not that I should be nicer to some people than others). Anyway, yeah, I get the definite impression that RedState gets some visitors who just come to irritate, and some RedStaters have jumped to that conclusion about me (and still do). I had to look up the word "troll" after being called it on RedState. And I almost got kicked off because I apparently followed some "pattern" that trolls typically use. My best guess is that the problem was that I posed several hypothetical questions to try to sort out the assumptions, principles, etc. underlying people's positions (i.e., the Socratic method) and some people get annoyed with hypotheticals for some reason.

Thanks for your advice.

The term 'moby' came from the singer Moby, who uttered the following infamous quote (copied from his wiki page):

(On convincing people not to vote for George W. Bush in 2004) "For example, you can go on all the pro-life chat rooms and say you're an outraged right-wing voter and that you know that George Bush drove an ex-girlfriend to an abortion clinic and paid for her to get an abortion. Then you go to an anti-immigration website chat room and ask, 'What's all this about George Bush proposing amnesty for illegal aliens?' ".

Hence the term is used to describe those that pretend to have political beliefs that are opposite from what they actually believe, and deliberately spread misinformation while in that role to discredit those who genuinely hold those positions.

---
Internet member since 1987
Member of the Surreality-Based Community

Needless to say, any such practice is lame. That's worse than someone who is just showing up to irritate. That's someone who is misrepresenting himself/herself to establish affinity for some disingenuous, manipulative purpose. And if it involves knowingly spreading false information, even worse. I don't know if I've been called that yet, but now that I know what it is, but if I am, I'll have to try to restrain myself as I reply.

If you're saying that our current debt-to-GDP, combined with our enormous unfunded liabilities and projected decline in worker-to-retireee ratio is NOT a cause for very serious concern and an argument for a major change in course in taxation and/or spending, good luck finding an economist of any stripe who would agree with you. If you don't wish to consider the consensus opinion of economists on this question, at least look at a broader set of relevant data.

Just a sample -- and be sure to read Heritage's commments below each chart (you may have to scroll down)
http://www.heritage.org/research/features/budgetchartbook/charts_P/p9.cf...

http://www.heritage.org/research/features/budgetchartbook/charts_P/p4.cf...

As a note, Heritage is fighting to keep taxes low. They just realize that doing so means serious cuts in entitlement benefits and/or eligibility. They absolutely do NOT think the course we're on is just fine.

Just to make sure Heritage's comments below those charts aren't missed, they are:

Spending for the three major entitlements -- Medicare, Medicaid, and Social Security -- will more than double by 2050. At this rate and without major reforms, entitlement spending is set to consume all federal tax revenues.

If "defense" and "other" spending are held constant at current levels of GDP rather than declining, total government spending will reach 47 percent of GDP by 2050.

That being said, we aren't alone in our unfunded liabilities of said social programs. Granted, we have solutions to a lot of those problems directly in front of us... but it seems like even Republicans lack the guts to do something about them, to say nothing of Democrats.

"To all those whom I have not yet offended: Please stand by, and I will work to remedy the situation as soon as possible."

Patiently waiting for a Fred Thompson / John Engler ticket.

That's why we need this ASAP

http://www.redstate.com/blogs/brooksrob/2007/may/01/providingcoverforfiscalresponsibility

I'll try link again
http://www.redstate.com/blogs/brooksrob/2007/may/01/providing_cover_for_...

Nothing is going to be done until its too late, there WILL be a massive financial crises caused by this debt, and it will be mostly taken care of my inflation. (after they change the inflation index, the first and most doable reform).

that is really the only way at that point they will be able to handle it. On the other hand a vast hike in regressive payroll taxes might have the salutary effect of sending Mexicans back home. (tongue in cheek)

"Nothing works like freedom, Nothing succeeds like liberty"
Kyle

Sorry about the formatting screw-up there. I think things went haywire because I used the asterisks in "bullsh**ting"

5/11 post on Greg Mankiw's blog http://gregmankiw.blogspot.com/2007/05/free-lunch-thinking-at-harvard.ht... (the subject of which is different than the tax cuts/tax revenues subject we're discussing here). Mankiw, as I noted previously is a supply-side economist, former Chairman of George W. Bush’s Council of Economic Advisors, and now Economics professor at Harvard. I've quoted him at least once in comments above -- specifically his conclusion that, "In the long run, about 17 percent of a cut in labor taxes is recouped through higher economic growth. The comparable figure for a cut in capital taxes is about 50 percent." In his 5/11 post, just as examples in making his case that purported free lunches are usually false promises, he says:

_*"Experience suggests, however, that purported free lunches are vastly more numerous than actual free lunches. I should note that purported free lunches are found on both sides of the political divide. Politicians on the right like to claim that their proposed tax cuts will completely pay for themselves with extra economic growth.* Politicians on the left like to claim that their proposed spending programs are investments that will yield returns so great that the spending becomes self-financing. Either outcome is possible in theory, but skepticism is usually the best response in practice."_

ok, I'm 0-for-2 on formatting today, but I think it's clear now which part is the 5/11 Mankiw quote.

According to the CBO, revenues for the past few years are:
2002 1,853.4
2003 1,782.5
2004 1,880.3
2005 2,153.9
2006 2,407.3

Revenues after the cut sure look higher to me. Let's see, initial drop followed by receipts larger than we started with.... yep, just as expected.

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

I guess there's no way I'm going to get you to understand the difference between a observations of correlation and establishment of likely causation via serious, professional analysis (using a sufficient number of data points and analytical tools to calculate the strength of correlation, evaluating various potential causal factors between dependent and independent variables, applying professional judgment, checking for spurious relationships, etc.), nor do you seem understand (or wish to) the concept of ceteris paribus as it applies in this case and in economics in general. I think I've done just about all I can to try to explain these concepts to you, but to no avail.

Some quick reading I recommend for you:
http://en.wikipedia.org/wiki/Correlation_does_not_imply_causation
http://en.wikipedia.org/wiki/Ceteris_paribus

and we're all very impressed. All things being equal, I don't accept the "professional judgement" of economists at face value anymore than I accept the professional judgement of climatologists. It all just depends on who's giving out the grant or funding the study. Never had to buy a climatologist, but I've certainly bought enough economists to sit in a witness chair and say just what they were being paid to say. Then my economist would be followed by the other side's economist saying just exactly what he was being paid to say.

In Vino Veritas

I know of a MRI facility that got sued by a psychic. She claimed the MRI robbed her of her abilities. Even had experts
______________________________
"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777

on just about any subject and get them to say just about anything; nasty business. In front of an expert trier of fact, e.g., labor arbitrator, ALJ, and with good advocates, one expert liar pretty much moots out the other and the facts get sorted out by the advocates and the trier of fact. Before twelve morons with drivers' licenses, its a whole 'nuther matter.

N.b., the only reason I ever used one was if the other side was planning to use one and I didn't want the arbitrator or ALJ to hinge a decision on "the unrebutted testimony of ..."

In Vino Veritas

First, I presented the term "ceteris paribus" in Latin because it is commonly presented as such in economics, not to be pretentious as you seem to be suggesting, and I defined and explained it in English in a previous comment.

Now on to substance. Here's what you're missing: There is consensus even the economists who are on your side of the policy issue -- economists who are very pro-tax-cut in general, who generally favored the Bush tax cuts and generally favor extending them -- are saying what I have stated on the relationship between tax cuts such as Bush's and revenues. These economist have absolutely no incentive, no motivation, to skew their analyses toward the conclusion that tax cuts like Bush's most likely LOWER revenues substantially vs. what they would be without the cuts. If anything, they have every incentive and motivation to conclude that the tax cuts they (and you) advocate INCREASE revenues. Yet they consistently conclude that the opposite. Why would they?? Why would Bush's own Treasury Secretary, his Council of Economic Advisors, and every private sector conservative economist whose opinion I could find state exactly what I have been saying if they didn't believe it to be true??

Econ class too. I still think you're a troll trying to match the now gone missing Flyerhawk's time for staying around here endlessly provoking pointless discussion, so I don't normally bother with you. I think I shall return to that stance towards you. Of course, you could be a reincarnation of the late and unlamented Flyerhawk, you have a lot in common.

In Vino Veritas

He found himself agreeing with us too often.
He probably felt we were a bad influence ;-)
______________________________
"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777

It's a shame we can't just discuss/debate the issues and let our arguments stand on their own merits. I raised an important point (about what I believe to be an invalid belief about the relationship between tax cuts and tax revenues), you made a counterargument, and I pointed out why your argument seems not to make and asked you to tell me how I'm wrong. Instead of answering my question you hurl an accusation ("troll") and state an unwillingess to discuss issues with me in the future. Well, to each his own, but I can't see much value in your approach.

I would add that seeking the best information available on which to base policy preferences has nothing to do with ideology (right, left, or other). It's just part of being a responsible citizen. And I've said repeatedly that there are legitimate arguments to be made for extending the tax cuts -- in fact, these same economists make them -- but we should base advocacy on those legitimate assumptions rather than myth.

A priori
The tax cut was predicted to have just this effect

a posteriori
Is trying to attribute other reasons to the behavior.

In science its usually good form to weight the A priori predictions that come to pass a little more heavily.
______________________________
"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777

However, the predicted effects seem to match the observed results.

And until you can produce a likely alternative cause that fits at least the standard of proof you are asking of us....

I will believe that the tax rate cuts caused economic stimulus with increased employement and other economic activity that resulted in higher revenues that we had before the rates were cut.

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

First, there's a flaw in the logic of your suggestion that just because I can't pinpoint what WAS/WERE the real cause(s) of the increased revenues, than it makes sense for you to conclude that some particular factor (the tax cuts) was the cause. I tried to explain with the analogy (admittedly extreme, but to make a point) that I think I can conclude that it is highly unlikely that the money I spent on my 2002 vacation was the primary cause of the increased federal tax revenues over the last several years. The fact that I am uncertain what WAS the cause doesn't mean that it would make sense not to rule out my vacation spending as the likely cause. Now, as I said, my example was extreme and I'm not saying my vacation and the tax cuts have an equal likelihood of having been the cause of the increases in federal revenue, but I think it illustrates the logical flaw in your argument. Even if a more likely cause has not been identified, you still have to make a compelling case for the causality you claim when the overwhelming consensus of experts say that your claim is invalid, and simple observation of a correlation (revenues rising after the tax cuts) does not constitute a compelling case for causation when contrasted with the more sophisticated analytical methodologies and theoretical grounding of all those economists.

As for possible causes, I'll paste (again) one comment here from supply-side economist Bruce Bartlett:

From Real Clear Politics, March 28, 2006:
Bush Tax Cuts Don't Pay For Themselves
By Bruce Bartlett
How likely is it that the Laffer curve is causing revenues to rise, as opposed to normal operation of the business cycle? Not much, in my opinion.
First of all, the Laffer curve came to prominence during a period when the top tax rate on dividends was 70 percent, and the rate on long-term capital gains was 40 percent…However, when President Bush took office, the top rate on dividends was down to 39.6 percent, and the rate on long-term capital gains was just 20 percent -- far below the rates Ronald Reagan inherited. It is very implausible that these rates were in the "prohibitive" range of the Laffer curve, such that a rate reduction would raise revenue.
But even if we grant the theory, how likely is it that the recent rise in revenue owes anything to this effect? Again, not much.

Between economic stimuli (reduced taxes) and gain in revenue. So you neglect the effect the tax cuts had on the business cycle when you only apply the laffer curve.
______________________________
"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777

Indeed, tax policy can affect the business cycle. But Bartlett is referring to the "normal" business cycle, by which he means the movement that would have occurred (for the most part, at least) without the tax cuts. In other words, the impact on the business cycle from the tax cuts was not great enough to attribute the rise in revenue to the tax cuts.

One additional note: If observation of increases in revenues is enough to conclude that the Bush tax cuts caused those increases, do you also conclude, based on the same exact type of observation, that the 1993 Clinton tax INCREASES caused the increases in revenues in subsequent years?

to include the 1997 capital gains cut in your analysis - seems everyone who brings this subject up always conveniently forgets to mention this.

___________________________________
The CIA has better politicians than it has spies - Fred Thompson

You seem to be implying that tax revenues did not go up until at least 1997. Check the chart:
http://www.heritage.org/research/features/BudgetChartBook/charts_R/r2.cf...