Since the beginning of the Reagan era the Republicans have been telling us their unbalanced tax cuts biased toward corporations and high-income individuals will eventually wind up paying for themselves by stimulating more economic activity and thereby increasing taxable income. Sound plausible? It isn’t. Sound complicated? It is.
George H. W. Bush called this idea "voo doo economics" in the 1980 Republican presidential primary campaign. But, ever the gentleman, he was too nice to call it the flat - out lie that it was. Paid-for tax cuts have never happened and never will. Is it that hard to understand? It must be because some of us keep falling for it.
Contrary to popular mythology, the records show that Republican presidents have added far more to the federal debt as a percentage of national income (GDP) than the Democrats. Republicans will readily increase spending when necessary, particularly military spending, their pet. But they balk at raising the necessary taxes to pay for these increases. Thus, it ends up as deficit spending and adds to the already-soaring federal debt.
The budget records show that Ronald Reagan created more debt than any other post-World-War II president. Surprisingly, Bill Clinton created the least. Gerald Ford, Ronald Reagan, George H. W. Bush and George W. Bush all added significantly to the federal debt. On the Democratic side only President Obama, who inherited the worst financial crisis since the Great Depression from his Republican predecessor, ranks high in contributing to the nation’s indebtedness.
Then who has reduced our debt the most? The No. 1 is Harry Truman, followed closely by Bill Clinton who balanced the federal budget in four of his eight years in office. Eisenhower is next, followed by Johnson, Nixon, JFK and Jimmy Carter. But only Clinton succeeded in substantially decreasing our federal debt-to-GDP levels, the category that really counts. While absolute levels of debt have been growing throughout this period, what really matters is the percentage of our GDP that debt actually represents. But back to voodoo economics.
Economist Arthur Laffer used his theoretical Laffer (laughable?) Curve formula to hypothesize that tax reductions could eventually pay for themselves. But although economic activity generally responds to tax changes, real world examples of tax cuts actually paying for themselves are non-existent. And that leads to another Republican myth that needs to be exploded once and for all.
It also appears to be common knowledge, among Republicans at least, that the economy performs better under Republican administrations. But an exhaustive study by the Economics Department of Princeton University revealed that over a 65-year study period the U.S. economy performed 1.6 times better and private sector job creation was 2.5 times greater under the Democrats than under the GOP. That’s over 65 years, mind you!
Even more alarming has been the growth of federal debt. Generally worse under Republicans, Ronald Reagan left us with more debt than any president since World War II. On the other hand, Bill Clinton, whom Republicans thoroughly despise, gave us balanced budgets in four of his eight years in office and left a budget surplus. His successor, George W. Bush, promptly squandered this surplus with tax cuts for the wealthy masquerading as "tax relief" and his foolish war against Iraq.
Why do the Republicans hate Bill Clinton so? That’s easy. He co-opted their own programs, pushed them through a Democratic Congress, made them work, and then rubbed their noses in it. No wonder they hate him. Wouldn’t you?
Again, it’s your choice: "Tax and Spend Democrats" or "Borrow and Spend Republicans."
George B. Reed Jr., who lives in Rossville, can be reached by email at email@example.com.