The New York Times has an article out today titled: “A Political Comeback: Supply-Side Economics” that asserts “the big supply-side tax cuts of the 1980s and the 2000s did not work as advertised.” While there is no hope that the Times will ever grasp the concept that lower tax rates on labor and capital will lead to increased economic growth, John McCain adviser Kevin Hassett had an interesting quote in the piece: “What really happens is that the economy grows more vigorously when you lower taxes. It is beyond the reach of economic science to explain precisely why this happens, but it does.”
Hassett’s regular employer, the American Enterprise Institute seems to have plenty of papers discussing why “the economy grows more vigorously” under lower taxes, but so does the Heritage Foundation. One of the better recent ones is by JD Foster who specifically addresses Bill Clinton adviser Gene Sperling’s claims later in the NYT that tax increases led to the “longest recovery in history.” Foster writes:
The Clinton defense is superficially plausible, but it fails under closer scrutiny. Economic growth was solid but hardly spectacular in the years immediately following the 1993 tax increase. The real economic boom occurred in the latter half of the decade, after the 1997 tax cut. Low taxes are still a key to a strong economy.
