Adam's Apple
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- Apr 25, 2004
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The Wonder of Voodoo Economics
By Rich Lowry, National Review
June 20, 2006
Who says you cant cut taxes, increase spending, and reduce the federal budget deficit all at the same time? Thats what the Bush administration has managed to do. Two decades after then-presidential candidate George H.W. Bush characterized Ronald Reagans idea that tax cuts would spur revenue-generating economic growth as voodoo economics, the witch doctor is again at work.
When President Bush pledged in 2004 to cut the deficit in half by 2009, critics guffawed. The Boston Globe headlined a story, Bushs plan to halve federal deficit seen as unlikely; higher spending, lower taxes dont mix, analysts say. Fanciful, laughable and all spin, said the critics.
Well, it turns out that 2009 might be coming early this year. The 2004 deficit had been projected to hit $521 billion, or 4.5 percent of gross domestic product. Bushs goal was to cut it to 2.25 percent of GDP by 2009not exactly as stirring a national goal as putting a man on the moon, but one that was nonetheless pronounced unattainable. This year, the deficit could go as low as $300 billion, right around the 2009 goal of 2.5 percent of GDP.
The key to the reduction is revenue growth, which has been stoked by economic growth. Government revenues are up 12.9 percent in the first eight months of this year over the same eight-month period last yearwithout any tax increases. When individuals, investors, and corporations have more cash in a growing economy, they send more to the federal government in tax payments.
This, despiteor, more accurately, because ofa couple of rounds of Bush tax cuts that were supposed to have been fiscally ruinous. The Bush tax reductions played some role in the economic expansion and therefore are responsible, partly, for the increased revenues. This doesnt mean that tax cuts pay for themselves, as their most fervent advocates say. But they certainly can offset some of their own cost.
for full article:
http://author.nationalreview.com/latest/?q=MjE1NQ==
By Rich Lowry, National Review
June 20, 2006
Who says you cant cut taxes, increase spending, and reduce the federal budget deficit all at the same time? Thats what the Bush administration has managed to do. Two decades after then-presidential candidate George H.W. Bush characterized Ronald Reagans idea that tax cuts would spur revenue-generating economic growth as voodoo economics, the witch doctor is again at work.
When President Bush pledged in 2004 to cut the deficit in half by 2009, critics guffawed. The Boston Globe headlined a story, Bushs plan to halve federal deficit seen as unlikely; higher spending, lower taxes dont mix, analysts say. Fanciful, laughable and all spin, said the critics.
Well, it turns out that 2009 might be coming early this year. The 2004 deficit had been projected to hit $521 billion, or 4.5 percent of gross domestic product. Bushs goal was to cut it to 2.25 percent of GDP by 2009not exactly as stirring a national goal as putting a man on the moon, but one that was nonetheless pronounced unattainable. This year, the deficit could go as low as $300 billion, right around the 2009 goal of 2.5 percent of GDP.
The key to the reduction is revenue growth, which has been stoked by economic growth. Government revenues are up 12.9 percent in the first eight months of this year over the same eight-month period last yearwithout any tax increases. When individuals, investors, and corporations have more cash in a growing economy, they send more to the federal government in tax payments.
This, despiteor, more accurately, because ofa couple of rounds of Bush tax cuts that were supposed to have been fiscally ruinous. The Bush tax reductions played some role in the economic expansion and therefore are responsible, partly, for the increased revenues. This doesnt mean that tax cuts pay for themselves, as their most fervent advocates say. But they certainly can offset some of their own cost.
for full article:
http://author.nationalreview.com/latest/?q=MjE1NQ==
