The Return Of Voodoo Economics

Sebastian Mallaby writes:

The Return Of Voodoo Economics: Nobody serious believes that tax cuts pay for themselves, as I noted last week. But most senior Republicans flunk this test of seriousness.... George W. Bush... told a New Hampshire audience, "You cut taxes and the tax revenues increase."... Dick Cheney... asserted in February that the "tax cuts have translated into higher federal revenues." Bill Frist.... "Many people in Washington have long known a dirty little secret about tax-cut measures: When done right, they actually result in more money for the government." Chuck Grassley... mouths the following nonsense: "There is a mindset in both branches of government that if you reduce taxes you have a net loss, if you increase taxes you have a net gain, and history does not show that relationship."...

Okay, so let's review this issue with the help of some experts.... N. Gregory Mankiw of Harvard... who chaired the Council of Economic Advisers in the Bush White House. Mankiw is a top-notch economist hired by Bush and Cheney to advise them. And last year he published a paper on how far tax cuts pay for themselves, reporting enthusiastically that this self-financing effect is "surprisingly large."... [O]ver the long run (the long run being generous to his argument), cuts on capital taxes generate enough extra growth to pay for half of the lost revenue. Hello, Mr. President, that means that the other half of the lost revenue translates into bigger deficits. Mankiw also calculates that the comparable figure for cuts in taxes on wages is 17 percent. Yes, Mr. President, that means every $1 trillion in tax cuts is going to add $830 billion to the national debt....

Mankiw isn't with them. Holtz-Eakin isn't with them. Which raises a question: When top Republicans go around claiming that tax cuts pay for themselves, which economic authorities are they relying on? None, is the answer. These people's approach to government is to make economics up....

Politicians are always speechifying about how the United States must lead the world in research to maintain its edge. But having the world's best economics research isn't particularly helpful if those same politicians are silly enough to tune it out...

Fine until the last paragraph. Then Mr. Mallaby stops saying "Republican politicians" and starts saying "politicians." You can say it, Mr. Mallaby: There's an obvious way to fix the problem you see: simply stop electing Republicans.