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The most tantalizing possibility of all, however, is that tax cutting, as an organizing principle for governance, no longer holds much allure for the voting public, which is surely aware by now of two things:
a.) the multiple tax cuts for the rich under Ronald Reagan and George W. Bush did not boost prosperity for the middle class, particularly during the past dozen years, when median income actually declined even as productivity increased;
b.) the main effect of tax cuts has been to increase the federal deficit. Even if you believe—as I do not—that government needs to be smaller, it’s been pretty well demonstrated that the “starve the beast” Republican strategy of cutting taxes to force budget cuts doesn’t work. It only increases the deficit. Indeed, the late libertarian economist William Niskanen argued persuasively that “starve the beast” actually increased government spending by discounting its cost, at least in the near term, which is the only thing voters usually pay attention to.
While I totally disagree with Tim’s analysis of the economic impact of tax cuts, I think Team Romney might well agree that tax cuts are a spent political force outside of Republican primaries. The 1980s are a long time ago to many Americans. The more recent economic episodes in the public mind are the booming 1990s when Clinton raised taxes and the 2000s when Bush cut taxes. The tax cut brand might be tarnished, even though such a perception reflects a total misreading of recent economic history.
Which is too bad. America desperately needs pro-growth tax reform to create jobs, raise incomes, and better handle the debt. In fact, we need to completely replace the income tax.
I would offer two pieces of advice: a) Romney should spend some time talking about why lower tax rates boost growth, and b) Romney should spend some time talking about why the Obama spending agenda would result in Carter-era tax rates.
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