“Let me propose something that may seem crazy to you: you don’t need to pay for tax cuts. They pay for themselves, if they are targeted, because they create jobs….” says Carly Fiorina in a radio interview with KCBS and CBS 5.
That does seem crazy. Especially in light of the overwhelming empirical evidence that proves that the trickle down economic theory, first proposed and implemented by Ronald Reagan in the 80’s, was wrong.
Rachel Maddow did an excellent piece last night on the evolution of this theory and the catastrophic results of this economic policy of funneling money to the wealthy and expecting it to “trickle down” to the rest of America. It didn’t work in the 8 years under Reagan. By the end of his term, the deficit had increased by a whopping 189%. It didn’t work under Bush Jr. From 2000-2008 the deficit grew an astounding 89%.
In fact, as Maddow and many others are pointing out, it was Bush Sr who termed this economic philosophy, “Voodoo Economics.” To wit, here is an excerpt of the first Pres. Bush’s analysis of Voodoo economics, quoted from the Rachel Maddow Blog:
“You are smart people. You know that the tax cuts have not fueled record revenues. You know what it takes to establish causality. You know that the first order effect of cutting taxes is to lower tax revenues. We all agree that the ultimate reduction in tax revenues can be less than this first order effect, because lower tax rates encourage greater economic activity and thus expand the tax base. No thoughtful person believes that this possible offset more than compensated for the first effect for these tax cuts. Not a single one.”
“The first order effect of cutting taxes is to lower tax revenues.” That makes sense. More sense than the idea that cutting tax revenues actually raises tax revenues. Yes, Carly Fioria proposes something that doesn’t just seem crazy, it is crazy.
But the Republican candidate for the U.S. Senate is only pushing the party line for this election season. The party of Reagan is trying to reconvince Americans that they are the party of fiscal conservatism…despite producing the largest deficits (see chart) over the last 30 years than either the Carter or the Clinton administrations ever did. They want the people to believe that Republican policies create jobs and grow the economy. In order to believe that, you have to believe in the “Tax Fairy.” (see the piece by Steve Benen at www.washingtonmonthly.com)
See the Bush-Reagan debate from 1980 on taxes here.
Hear the Fiorina interview with KCBS’ Doug Sovern and CBS 5′s Simon Perez here.
Let me know what you think – Please leave a comment below