Problem Solved!

One of Patrick Appel's readers writes in to explain how McCain will square the circle in dealing with his confused and contradictory economic policies:

I think the way that McCain may well be able to connect the two schools of economic thought, supply side and budget balancing, is to look at what he has said would be his primary priority: restraining federal spending. He has acknowledged that he was wrong to believe that the Bush tax cuts (and previous tax cuts) led to reduced revenues for the Federal government. Clearly, at least in the past 50 or so years, the U.S. has been on the side of the curve where cutting taxes results in increased economic activity which results in greater tax receipts for the Federal government.

This if true would, indeed, be a solution of sorts. But the "if true" part of the previous sentence is carrying a lot of weight it can't bear. Tax cuts don't increase revenue under anything resembling prevailing conditions in the United States. But, yes, I agree with the general spirit of the idea that dishonesty and flim-flam will be McCain's ticket out of the cesspool of ignorance and contradiction in which his economic thinking tends to wallow.

Comments

I do wish someone would ask one of these politicians where they will get roughly $400 billion in spending cuts without cutting into their sacred oxen, defense.

We should be old enough and mature enough as a country that this kind of stupid pandering disappears.

Posted by z adura | February 19, 2008 9:15 AM

z, what person did this old and mature country elect in 2004?

Posted by Gore/Edwards 08 | February 19, 2008 9:26 AM

Nah, McCain will just try to change the subject to how electing Obama will be the same as surrendering to Osama.

Posted by Ron | February 19, 2008 9:41 AM

Maybe the Very Serious Media will report that anybody who claims to want to cut spending, but supports adding even more bloat to the already ridiculously excesssive MILITARY budget (not to mention the cost of "100 years in Iraq"), is completely full of crap?

Oh sorry, must have fallen asleep- only in my dreams would the Very Serious MSM point that out.

Posted by Steve LaBonne | February 19, 2008 9:47 AM

That reader quote is garbage, especially what follows Matt's excerpt. First of all, the idea that non-defense spending alone causes the budget deficit is insanity. If the reader is talking about entitlements, that is true. But then, what is really meant and proposed here is the dreaded and seemingly politically impossible "entitlement reform."

If the reader is talking about non-denfense discretionary spending, it's dead wrong. For a lot of the Bush years you could have zero-ed out all of the non-defense discretionary funding and you would barely balance the budget. That's not keeping it "static." That's plain getting rid of it.

Also, as Matt is pointing out, cutting taxes may correlate to more economic activity in the long-term, but there are two problems with that idea: 1) gigantic short-term budget deficits while taxes are cut that won't be made up any time soon, and 2) it's very difficult to tell whether the impact from these tax cuts is actually what causes the economic growth that follows. Too many other factors are typically in play.

Posted by MrProliferation | February 19, 2008 9:54 AM

The whole 100 years in Iraq thing pretty much rules out fiscal restraint.

Posted by RM | February 19, 2008 10:15 AM

the U.S. has been on the side of the curve where cutting taxes results in increased economic activity

I'm still curious why tax cutting gets all the credit for economic stimulus, but the second half of the Keynesian equation - running $400-500B deficits - doesn't.

[N.B. saying tax cutting may have had a stimulative effect is not the same as saying they pay for themselves.]

Posted by McKingford | February 19, 2008 11:50 AM

"But, yes, I agree with the general spirit of the idea that dishonesty and flim-flam will be McCain's ticket out of the cesspool of ignorance and contradiction in which his economic thinking tends to wallow."

Is that going to be your method, too, Matt?

Posted by Richard Steven Hack | February 19, 2008 10:00 PM