Over at DaytonOS, liberal blogger Mike Bock pens an important piece about Rudy Guiliani and the claims of post-taxcut increased revenues. It is a very clever read and it is an argument I have heard several times made by liberal readers of WMD.
It is a great read and well written, so I encourage everybody to go read it. It is also, lacking in perspective.
The thrust of the argument is that economists of every stripe say that tax cuts reduce government revenue. The problem with that? Uh, well, that would the reality that the post-taxcut revenues actually increased by 35% (see first bullet point in this BizzyBlog post). Mike fails to mention this fact. Why? I suspect that it doesn't fit his worldview or that of the economists he quotes in the piece.
Economists, you say? Yes. Mike quotes some "Democrat" and "Republican" economists. Isn't it interesting how the science of economics has gotten politicized? I think so too... I'm supposed to dispense with the reality that revenues increased after the tax cuts just because some economists who worked for the Bush administration says something.
Here is the problem with economists... Economists are not fortune tellers. Economists can only make predictions based on set numbers that don't change much. They like numbers that are real. They think of the economy as a pie that doesn't change shape or consistency. The problem is that the economy doesn't work that way.
What the tax cut does is it actually increases the size of the pie. While the economy adjusts to deal with the new volume, revenues increase as Americans have more money to spend and businesses have more to invest. That creates unpredictable results for the economists...
There does come a point where the revenue stream stagnates and, as I am sure BizzyBlog will tell you, that is not a time for a tax hike but rather the opposite. Ultimately, there is a point where the tax receipts balances with what is required to operate the government sufficiently and then no further action need be taken.
The problem with government revenue isn't the amount of funding it is receiving from the American people. The problem is how much that government is spending. If liberals want to have more money on hand, maybe they ought to take a closer look at the pork that is being wasted in Dee-Cee and then get back to me.