Laffering All the Way to the Bank

Charlie Rangel floats tax reform proposal and before any serious people even have time to consider its merits House GOP Leader John Boehner explains it will reduce revenues through increasing tax rates: "Imposing higher taxes at this time will doom our economy, put people out of work and cost the federal government revenue that is badly needed, if in fact we're going to balance the budget." I would really like someone to explain to me why the press doesn't treat this kind of thing as a gaffe. I remember when Howard Dean couldn't correctly state the total number of people in the Army and it was like the end of the world.

But the top House Republican (like the president and vice president of the united states and most other Republican Party elected officials) can't correctly state the relationship between tax rates and federal revenues, which seems like a big deal.

Comments

"I would really like someone to explain to me why the press doesn't treat this kind of thing as a gaffe."

Because that would require that reporters understand anything about economics rather than just whether this will allow Republicans to accuse Democrats of being tax-and-spend liberals. Or to put it more simply, reporters are dumb.

Posted by Ron | October 26, 2007 1:05 PM

Or...the smart set flatters itself that it sees right through to the sophistry of the Boneman--and admires him for the chutzpah with which he attacks Rangle. Truly a decadent age.

Posted by elle loco | October 26, 2007 1:19 PM

The Laffer Curve is no longer a curve. It is a straight line that descends as taxes increase. Apparently, we would maximize our tax revenue by collecting no taxes at all. These people are insane.

Posted by fostert | October 26, 2007 1:30 PM

At least the Democratic response for the he-said, she-said articles should be that Boehner is a stark raving lunatic if he believes that.

Posted by bob | October 26, 2007 1:34 PM

That, and if John Boehner doesn't want to cut taxes on 90 million hard-working Americans, that's his problem.

Posted by bob | October 26, 2007 1:36 PM

These people are a joke. If they believed what they're saying (and I doubt they do) they'd have to think that our economy was incredibly fragile, when in fact the opposite has proven true time and again.

Posted by henry evans | October 26, 2007 1:36 PM

"I would really like someone to explain to me why the press doesn't treat this kind of thing as a gaffe."

Because the press does not want to take a position on religious matters.

Posted by Dantheman | October 26, 2007 2:20 PM

I'll second Ron's "reporters are dumb" answer. Sometimes I think journalism majors should be required to double-major so that they have at least one topic they can write about intelligently.

Posted by fling93 | October 26, 2007 2:48 PM

Math is hard; let's go shopping.

Posted by Bo | October 26, 2007 3:22 PM

The thing that appears to hurt the economy is not a tax increase but a phased-in tax cut such as the tax cuts of 2001 and 1981.

Whatever benefits the Laffer curve provides are minor compared to the incentive to put off taking income until the tax cut is fully implemented.

We had a recession after the phased in tax cut in 1981 and 2001.

It is hard to generalize with just two data points but it is also two more data points than the Republicans have to make their claims.

Posted by neil wilson | October 26, 2007 3:23 PM

Boehner's comment is even worse than just simple Laffer propaganda. Rangel's proposal is supposedly revenue neutral. It doesn't actually have any net change in taxes so should have no Laffer effect. What Rangel's plan does is shift some of the tax burden from the middle class (eliminate AMT) to the rich (tax surcharge). So what Boehner is apparently saying is that the Laffer curve only applies to the wealthy.

Posted by Joe | October 26, 2007 3:47 PM

Matt,

It's the same reason they can't say Jesus didn't really rise from the dead. The press cannot point out obvious holes in peoples religious beliefs.

Posted by Grogor | October 26, 2007 3:55 PM

Oops, Dantheman beat me to it.

Posted by Grogor | October 26, 2007 3:57 PM

I guess it falls to me to state the obvious: not all taxes have the same effect on the economy. *Obviously*, a tax on the wealthy creates a disincentive for people to *become* wealthy, while a tax on the poor creates a disincentive to people who feel that it's their right to not earn a lot of money. This is a kind of vice, like smoking, and it damages the economy for all the rest of us. I saw we tax the heck out of poor people.

Posted by mark | October 26, 2007 3:58 PM

To be sure, serious supply-side economics isn't about federal revenues. It's about the effects of marginal tax rates on productivity and growth.

The Laffer Curve was merely a response to the concern about tax cuts on revenues, but after the Republicans jumped on it as a way to defend tax cuts, it's all that anybody remembers nowadays.

Posted by fling93 | October 26, 2007 4:34 PM

Re: I remember when Howard Dean couldn't correctly state the total number of people in the Army and it was like the end of the world.

You know I don't recall that at all, and I'm something of a political junkie. I suspect the incident was one of those little in-house flaps that no one outside the Beltway paid the slightest attention to.

Posted by Jonf | October 26, 2007 9:18 PM