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Discussion: (3 comments)

  1. MacDaddyWatch

    During the comparable period for the Reagan Recovery, GDP grew at the annualized rate of about 5.7%, almost 3 times faster. For all of 1984, GDP grew at about 7%. And let us not forget that the earlier recovery was launched from an economic terrain of 21% interest rates, a collapsed S&L industry and 11% unemployment–far worse than the economic and financial circumstances surrounding the more recent Failure to Launch.

    Most economists expect the Q4/12 GDP growth rate to plunge to just 1.6% with the increasing possibility that all bets are off (the Cliff) for any growth at all in 2013.

  2. Michael Stein

    I fear that Mr. Wallison has a comprehension problem with the English language. The professor made a claim about what Republicans _believe_ about tax increases. He may well be wrong about that, but it’s not the same thing as being wrong about economics _per se_. The professor believes that there exists a level of tax increase that will increase revenue over and above current revenue. Mr. Wallison cited no claim by the professor that an X% tax increase will lead to an X% revenue increase, rather than a Y% revenue increase where 0<Y<X. And Mr. Wallison even agreed that the latter can be true! If the professor is guilty of misrepresenting the views of Republicans, Mr. Wallison is equally guilty of misrepresenting the words of the professor and constructing a strawman argument.

    Even if it's true that a tax cut now will produce more revenue in (say) the sixth year after the cut than some alternate policy, remember that for the prior five years your revenues were lower – and thus adding to the deficit. If a tax cut spurs growth, it needs to do it fast enough to avoid going off a Greek debt cliff. And if your response is, "Cut spending even further to compensate", remember that this will result in more unemployment, reducing demand and risking a return into recession. That in turn would further reduce revenues.

  3. When Reagan increased taxes via closing loopholes in the tax code – it increased revenues – enough to keep a major deficit from growing.

    In terms of increased tax revenues – why is closing loopholes any different than increasing the tax rate?

    both end up increasing taxes on people the former, a select group, the later – everyone in the tax brackets.

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