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Politics : Just the Facts, Ma'am: A Compendium of Liberal Fiction -- Ignore unavailable to you. Want to Upgrade?

To: Lazarus_Long who wrote (48829)	6/7/2006 5:12:26 PM
From: TimF	Read Replies (1) \| Respond to of 90947

I promised that in this column, I would debunk one of the most pernicious economic ideas of the left. (In my last column, I skewered one from the right: See "Debunking One of the Worst Ideas in Economics" Mr Wheelan writes as if the two ideas are equivalently wrong and equivalently debunked. But they are not. The "lump of labor" and "zero sum" ideas he debunks are indeed wrong and very harmful. The Laffer curve is actually correct (to his credit he does say as much) but it doesn't mean that all tax cuts always "pay for themselves". However the idea that all tax cuts quickly pay for themselves is largely a straw man for Wheelan to beat up on. Also Wheelan only considers the effect of tax cuts over a limited time, however there is no reason to think that positive benefits to economic growth of reducing the top tax rate from say 40% to 30% stop after a few years (unless the cut is repealed). If over a century you get just an extra .4% growth a year, you wind up with an economy that is about half again larger than it would have been had there been no tax cut. Wheelan says that assuming an extra trillion dollars in growth is "a Herculean assumption", and it is, but only in the short run.