A "tax cut" is a tax cut.
The tax cuts HAPPENED.
Taxes where cut, then they where increased, then they where increased again a few times, then they where cut again...
In other words "starve the beast" has failed to be consistently applied. For it to really be applied you would need durable large tax cuts, started in the context of a deficit or an impending deficit.
The only problem is that government SPENDING was *not cut* at the very same time.
Spending is almost never cut in nominal dollar or real dollar terms. As a percentage of the economy it might be cut, but its generally been in an upward trend. The alternative result you have to compare the result after the tax cut to, the "what would have happened if we had not cut taxes" result, is likely one with higher spending. "Spending went up", in the context of the fact that spending would have gone up anyway, does not imply "starve the beast failed". The attempt worked if you have lowering spending down the line, than you would have had you not cut taxes. But its VERY hard to figure out what spending would have been in this counterfactual scenario. Similarly if spending goes down after the tax cut, but it would have gone down anyway if no tax changes have been made, then you don't have evidence that starve the beast worked. If the spending cut was smaller than it otherwise would have been, than "starve the beast" would have failed rather spectacularly even in the context of its apparent success.
To put it another way its not easy to isolate the variables here, at least in the absence of extreme results. Typically you won't get extreme results, so typically there will always be room for debate about how successful the attempt was. The one thing we can fairly safely say is that its had to have been a disappointment for its strongest supporters, if they are rationally analyzing the results. They where not looking for arguably minor cuts in the level of spending increases, that still resulted in a bigger government as a percentage of GDP. They where looking for a clear, large, reduction in government spending as a portion of the economy. And they didn't get that.
Unless your eyes are closed it proves at least one thing: that ONE of those economic approaches posted great success toward achieving it's stated goal of 'reduced size for the government sector' while the other did not....
It shows that lowering spending growth leads to less spending growth, but that hardly needs to be shown.
It shows nothing about lowering or increasing taxes, and the result of such changes on the level of spending.
Yes after the tax increase, spending decreased (as a percentage of GDP, not by most other measures). And a number of hours after I went to sleep last night the sun came up. I don't see any more casual connection between the tax increase and a reduction of government spending as a percentage of the economy than I do between my going to sleep and the sun going up. I haven't even seen you arguing for a method that could cause such a casual connection. |
