' I’d suggest that protesters also demand infrastructure investment — not more tax cuts — to help create jobs. Neither proposal is going to become law in the current political climate, but the whole point of the protests is to change that political climate. '
The New American Economy: The Failure of Reaganomics and a New Way Forward By Bruce Bartlett
It should be recalled that Bruce Bartlett was one of the primary advocates of supply-side economics in the late 70s and early 80s. In fact he was one of the main authors of the Kemp-Roth bill, which called for steep tax cuts in the top marginal income tax rates to spur economic growth. Ronald Reagan ran with this idea in 1980 and tax cuts were enacted into law a year later, thereby ushering in more than two decades of robust economic growth. In 1981 Bartlett wrote a book about this experience called Reaganomics: Supply Side Economics in Action.
In his new book, The New American Economy, he tells us that supply-side economics has outlived its usefulness, at least for now. In the late 70's we had high taxes and high demand which caused inflation; today we have relvatively low taxes and also low demand, which causes deflation. Supply-side economics no longer needs to be advocated, for it has already become part of everyone's way of thinking. Even the Obama Administration has its share of supply-siders. The stimulus package called for tax cuts for the vast majority and a small increase for the top percentile, still low historically.
According to Bartlett, Keynesian economics or fiscal policy is the best response to the current crisis. This is an apostasy to his conservative friends, where Keynesian is always a pejorative for a big government spending program. However, with interest rates at the bottom, it is obvious that government spending is the only way out of the current liquidity trap. If business and the consumer are not spending the government must. Not surpisingly, Bartlett was in favor of this year's stimulus package, not for its tax cuts, which he thought ineffective, but for its public spending component.
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