The life cycle of bad ideas is a curious thing.
No, wait, no it isn’t. Something about history repeating itself and not being smart enough to recognize the point goes here. At any rate, Simon Maloy tries to explain a thing or two about the latest revival of supply-side mysticism:
they love cutting taxes for rich people, and they’re also enthusiastic deficit scolds. There’s a seemingly irreconcilable tension in that worldview that arises from a straightforward assumption: cutting tax rates for the people who pay the largest share of taxes will result in the government taking in less revenue.
The way they get around this dilemma is through the magic of dynamic scoring. Basically, when they calculate the cost of a tax cut, they assume that cutting taxes will produce an explosion of economic growth that will actually result in higher tax revenues. Cutting taxes, therefore, won’t increase the deficit – it could actually lower it! This is, to put it mildly, a contentious idea. Dynamic scoring on its own isn’t a particularly controversial practice, but strong proponents of supply-side economics vigorously abuse it in order to make some ruinous economic proposals seem palatable.
One of the biggest adherents of dynamic scoring is Rep. Paul Ryan, the incoming chair of the House Ways and Means Committee. The most recent of his celebrated ultra-conservative budget proposals made enthusiastic use of dynamic scoring in order to achieve balance in 10 years while simultaneously slashing tax rates and boosting defense spending. When you just assume that lowering tax rates will supercharge economic growth, anything becomes possible.
This is hardly news: The presumed increased revenues resulting from tax cuts are simply presumptions.
Those who remember Voodoo Reaganomics occasionally scratch their heads and wonder, “What? We’re still having this discussion?” And those who remember the financial crisis that started with the Bear Stearns collapse in 2007 can always blame it on the president who was elected in 2008 and didn’t take office until 2009. The idea is simple enough, that if the government takes less money in taxes, that money will produce even more in taxes under lower rates by staying in the consumer and business economies. The result, of course, is a widening gap between rich and poor, a private business sector that has become so privileged it feels the products and services it offers in exchange for money are merely obstacles they must overcome in order to get what is rightly theirs—namely the money in your pocket—and a resounding, persistent failure to produce the promised returns. All of these, of course, are why Rep. Paul Ryan (R-WI01) calls “dynamic scoring” by another moniker, “reality-based scoring”.
You see, sometimes a joke is funny because it’s true. In the Republican Party, a fantasy is true because it sounds funny.
The thing is that we have an ongoing supply-side experiment in progress, and that is called Kansas, where Gov. Sam Brownback and his supporters—self-described (ahem!) “Brownbackers”—have produced not the fantasy results but, rather about what you might expect. Fiscal affairs in Kansas government are a bit sensitive at the moment, but don’t worry, the fantasy math says things will work out okay in the end.
Strangely, Mr. Ryan, the GOP vice presidential nominee in 2012, is considered something of a budget wonk.
Perhaps they have the wrong vowel.
Maloy, Simon. “Paul Ryan’s ‘reality’ problem: Why his justification of ruinous supply-side tax policies is warped “. Salon. 1 December 2014.