Bush's Economic Stimulus Package: The Death of Supply Side

While a lot of us mock the economic stimulus package presented today by Bush, it is interesting what he is essentially admitting: Supply Side didn't work.

Think about what he is proposing for the most part. He is proposing a massive series of tax rebates to boost consumer spending to shore up the demand side of the economy. In this is a tacit admission that the supply side policies of the past several years have failed to create sustainable growth and a good old Keynesian stimulus plan of deficit spending(or short term tax cuts) aimed at the consumer end of the economy is the best way to get us out of this funk.

This is a great day, though I have to admit it comes at the worst of times. We do have an implicit repudiation of the central guiding theme of the Republican Party's economic policies from their own president.

Will we ever learn?

and we all know WHAT trickles down.

he'll be kicked out of the old repug boys club for that. :evilgrin: total repudiation of trickle down. i'm lovin' it.

ellen fl

You are assuming that the economic conservative philosophy is somehow based on rational thinking. If it were, simple empirical analysis would have told them by now that their supply side hypotheses were incorrect. While there are some distinct differences between economic conservatives and social conservatives, in my opinion there is one unifying factor: faith. Supply side economics is faith based, they believe it _should_ work regardless of if it does, it is somehow a "superior" strategy.

I went to the IRS and downloaded a spreadsheet with the revenue streams to government broken out. I normalized it to the consumer price index and showed them empirically that Reagan's tax cuts did not result in an increase in revenue. However, his tax increases did result in increase in revenue. He increased the SS tax, excise taxes, capital gains tax, and removed loopholes in the corporate tax. You can see increases in revenue for those categories categories after he signed each of those increases into law.

They didn't believe it since the executive branch was controlled by Clinton at the time this spreadsheet was published. They claimed that the IRS data was manipulated to make Reagan look bad. They also didn't believe that Reagan increased taxes. Even when I pointed out the legislation and comments by David Stockton on how the Reagan administration was freaking out over the lack of revenue growth. It is definitely a matter of faith for them.

BTW, here's a great article on Reagan by Joshua Green in the Washington Monthly.

They don't care.

Which Clinton also knew, and put into practice to great effect. :)