Reply #5: Supply side hokum

[RichardRay]

Event the most ardent supply side economists have admitted that while cutting taxes may stimulate some parts of the economy, the increase is not adquate to off set the loss of revenue from the original cuts. I'd have to find the research again, but I recall the best case being about .71 cents in from stimulation for each 1.00 lost to the tax cuts. Most cases were not that good.

I think it's sort of like the WMD thing. The CIA analysts sent up an intelligence briefing with all kinds of caveats. The administration stripped out the caveats and used the (mis)information to blow smoke. The same thing happens with supply siders - the honest researchers say something like "while tax cuts stimulate some portions of the economy, the overall effect is a revenue loss." The politicians quote that as "Tax cuts stimulate the economy."

For a useful review of supply side "theory" and where it came from see:

The Rise of Supply Side Economics


(edit: added link)