Let's get something straight once and for all....

[sendero]

... supply side economics is a DEAD FAILURE.

When people, even here on DU, spout this utter drivel - the idea that tax cuts for the wealthy create jobs, you can LAUGH IN THEIR STUPID FACES. If tax cuts for the rich made jobs, WHERE ARE THEY? If deregulated businesses will "do the right thing", WHY DID THE DEREGULATED FINANCIAL INDUSTRY DESTROY OUR ECONOMY?

There are 3 and only three categories of people still talking this nonsense:

1) Idiot Libertarians who cannot see that their economic ideas are RUBBISH in the face of TOTAL ABJECT FAILURE of said policies.

2) People who have been inundated with propaganda for so long they believe the bullshit in the face of incontrovertible contrary evidence

3) Paid shills

Businesses do not invest capital unless they can get a return on it. There is no capital formation problem, it's just that right now, with Americans bled dry from all sides, there is no way to profit from them by investing said capital. Giving them more helps nothing, period.

Thanks for reading.

[Orrex]

1. You're right! Tax cuts for the rich are the only things that can save us now!

[PufPuf23]

2. Supply side economics fails in ecology and operations research and only works in classical

supply and demand models with assumptions alien to natural law.

Supply side economics is a recipe for short term gains and wealth and income accumulation for the very wealthy; the extreme is disaster capitalism.

Supply side economics is not only theoretical bullshit but leads away from Democracy of any form and Generral Welfare of the People (even when resources are readily available using local and green technology.

[Little Star]

3. A-fuckin-men!

[unblock]

4. any solution that claims to solve all problems in all situations is blatant snake oil.

got a problem? cut taxes!

cutting taxes IS the right solution UNDER CERTAIN, HIGHLY SPECIFIC CONDITIONS.

the economy is vastly more complicated and there are many policy and monetary levers that the government can use to control it. cutting taxes is but one of them. even within the realm of tax cuts, there is plenty of room for huge policy differences in terms of where in the economy to pump the benefits of the cuts -- poor people? rich people? eco-friendly people? etc.

in practice, supply-side economics was just another in an endless series of "sounds good enough to make my naked, greedy money grab look like something better than a naked, greedy money grab" fictions.

[sendero]

5. I agree..

... it's not that there is never a time that cutting taxes is the right thing to do, it's just that we've long since passed that time.

[Motown_Johnny]

7. and the "We can solve the deficit created with tax cuts with more tax cuts"

meme is so ridiculous as to be simply laughable. To bad most people just don't get the joke.

[unblock]

9. you mean "laffable" or is it "lafferable"?

yes, the specific conditions for a tax cut to create more revenue include that (a) the old marginal tax rate be VERY high and (b) the tax cut NOT be very large.

simplistically, cutting tax rates in half means the economy would have to DOUBLE in order for tax revenues to break even. that's completely insane, never gonna happen. so cutting tax rates in half is WAY too much for this to work.

cutting taxes from a top rate of 80% to a top rate of 75%, THAT might actually produce more revenue. but that's the right range needed for the idea to work.


more complicated is the fact that expectations of FUTURE tax rates also matters. reagans 10-10-10 idea was nuts because when people expect tax rates to be even lower in the future, then they defer economic activity, particularly realizing gains, until the even lower tax rates arrive.

the best effect is low tax rates with a (somehow) constant fear that next year's rates will be higher. THAT best generates economic activity and hence tax revenues.

[Motown_Johnny]

16. laffable and lafferable do not seem to be actual words

on Dictionary.com both come up as "no dictionary results"

http://dictionary.reference.com/browse/laffable
http://dictionary.reference.com/browse/lafferable



Laughable, on the other hand...


http://dictionary.reference.com/browse/laughable

^snip^

laugh·a·ble   /ˈlæfəbəl, ˈlɑfə-/ Show Spelled
Show IPA

–adjective
such as to cause laughter; funny; amusing; ludicrous.









And the way to deal with your (somehow) is to deal with the balanced budged amendment crowd to have an automatic increase written into law every time the deficit increases X amount. Not that it would pass in this environment but it would always keep some people betting that the increase would happen next time around.

[unblock]

17. maybe i'm showing my age -- the guy who advanced the revenue-gaining theory was named arthur laffer

http://en.wikipedia.org/wiki/Arthur_Laffer

[Motown_Johnny]

18. Doh, no not showing your age, showing my ignorance

I am humbled by your knowledge and wisdom

[BobbyBoring]

19. Not only that

The "Laffer Curve" was drawn on a cocktail napkin to illustrate gains in government income relating to tax breaks. I'm afraid too many cocktails were consumed before drawing on said napkin as a sober mind could not concoct such drivel. derp

[unblock]

20. actually, the laffer curve is true, and fairly obviously true

you kinda can't argue that if tax rates were 100% on everything, the government would collect nearly zero because no one would bother earning (or at least, they wouldn't report it), whereas if it were a mere 90% or 80%, there would be some notable revenues.

the question is where is the optimal point? nevermind that it depends on many factors, but clearly the optimal revenue-maximizing top tax rate is well north of 50%. small drops in marginal tax rates below that need to generate implausibly huge booms in the economy in order to make up for the lower percentage.

so as a theoretical idea, it's true. but as always, the devil's in the details. laffer and other republicans used it to argue that the top tax rate should be basically cut in half, which meant that the economy pretty much needed to double to make up the difference, something that was absolutely crazy.

[JoeyT]

22. It also ignores that there are other reasons for tax rates than increasing revenue

Even if the optimal revenue generation number was 40% (Just to pull a number out of the air: I don't think it's anything like that low) it might still benefit the country to have it much higher. Even into the 80%+ range on very high levels of income. At that level you're preventing concentration of wealth into the hands of a few. You're pushing for a living and vivid economy with a lot of class mobility instead of a stagnant economy with a few dudes at the top with everything and the rest of the country at the bottom with nothing.

[Motown_Johnny]

6. I have been referring to it as Trickle Down aka American Decline Economics

IMO it is the largest single factor leading to the decline of this country.

[Fumesucker]

8. It reminds me of the old business joke about "I lose money on every sale"..

"But I make it up on quantity.".

I'm amazed how many distinctly non-wealthy people I run into who buy the whole trickle down nonsense lock, stock and clambake.

[Patiod]

10. And they assume that they're heading there in due time

Poorly educated, unconnected and unfunded, these Horatio Algers think they are heading for cushy jobs at Goldman Sachs any day now, and don't want to have to pay any pesky taxes when they DO hit it big.

[Motown_Johnny]

12. I think it is Lotto Dementia

They honestly believe that sooner or later they will win millions with their lottery tickets (because God wants them to win) so they vote against their own self interest.




Uh Oh, I just remembered that the Mega Millions is over $200 million. I gotta go waste some money on that (but it helps the schools).



OK, I do it a little too, but I know the odds are against me and I vote that way.

[ChoppinBroccoli]

11. You're Wrong! Trickle-Down Theory Works For EVERYTHING

The Trickle-Down solution to world hunger: give the food to well-fed people who already have a freezer full of it. The food will eventually trickle down to the people who are hungry, right? Right? Right! When the well-fed people can't eat the food in time, it will go rotten, they'll throw it away, and right there that food will be for the hungry people.............to eat the rotten food out of their garbage cans! See? Trickle-down theory makes EVERYTHING better and works for EVERYONE!!!

[Fumesucker]

13. However, name some *other* theory that is allowed to be discussed seriously in DC..

That is the problem in a nutshell, the only economic theory of taxation that's even allowed to be discussed in the halls of power is one that was proven to be utter rubbish at least a decade ago.

[Autumn]

14. Thanks for posting

K/R

[Lydia Leftcoast]

15. Libertarians, supply siders, and "free" trade advocates

all have more in common with Moonies and other cult members than with people who live in the real world.

If you try to present them with facts, they just repeat talking points.

[bvar22]

21. True.

I wish Leadership of the New Democrat Party agreed with you.




Who will STAND UP and represent THIS American Majority?
Platitudes, Rhetoric, Empty Promises, and Excuses are meaningless now.

"By their WORKS you will know them,"
And by their WORKS they will be held accountable.

[Blue-Jay]

23. oblig.

[defendandprotect]

24. kr