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Saturday, March 10, 2007

I Can Do That Voodoo That You Do Too

Jonathan Chait watches John McCain adopt the party line and faithfully assert that tax cuts increase government revenues even though there's no evidence to support that contention:

John McCain goes over to the dark side, by Jonathan Chait, Commentary, LA Times: 'This is not Luke Skywalker here," said Sen. Lindsey Graham (R-S.C.), discussing his friend and Senate colleague John McCain's second run for the presidency. "This is a totally different campaign." ...

Seven years ago, of course, McCain was likening himself in public to Luke Skywalker, waving light sabers on stage at rallies and comparing his party's establishment to the Death Star. He would say such things as, "My party has become captive to special interests." He would cite a bumper sticker that read "The Christian Right Is Neither."

And now? Well, let's just say that if John McCain circa 2007 was campaigning against John McCain circa 2000, he would call him a communist. The old McCain called President Bush's tax cuts fiscally and socially irresponsible, a giveaway to the rich in a time of rising inequality. The new McCain was recently interviewed by National Review's Ramesh Ponnuru and asked if there were any circumstances, including the guarantee of spending cuts, under which he'd consider repealing the tax cuts he denounced and voted against. He replied: "No. None. None. Tax cuts, starting with Kennedy, as we all know, increase revenues."

We all know that? In fact, economists know that this is not true. Conservative economists know this isn't true. Even conservative economists who work in the Bush administration have admitted this isn't true. ... There's really no dispute among economists about that."

How does McCain explain his conversion to voodoo economics? He doesn't. He says things like: "I haven't changed. My record is the same on all issues, which is that of a conservative Republican." Which is funny, because a few years ago one of his close advisors — someone who is now furiously insisting that McCain has always been a staunch conservative — told me, "Ideologically, we all changed."

What makes McCain's conversion all the more tragic is that it's plainly not working. ... His career ... has indeed resembled a certain famous Jedi. He began as a crusader for justice. Soon he realized that he needed to acquire more power in order to accomplish his noble goals. But over time, his pursuit of power became the goal itself, and by the end he lost his capacity to differentiate between right and wrong.

This is not Luke Skywalker here. This is Luke Skywalker's father. But at least Darth Vader attained his position before the Death Star exploded.

Given the vast amount that's been written concerning tax cuts and government revenue and the broad consensus on the topic, it's difficult to believe that any major candidate could be ignorant of the work showing that tax cuts do not increase revenue. If they are ignorant of this broad consensus, or if they choose to simply ignore the evidence and adopt the party line that tax cuts pay for themselves, then questions should be raised about their ability to lead the nation in economic policy. Will they understand enough economics to implement effective policy? If they do understand, will ideology or party loyalty get in the way?

Update: Vox Baby says:

More Laffer Curve Laughers: Via Greg Mankiw, we find this National Review interview of Senator McCain by Ramesh Ponnuru. Greg refers us to this part of the Q&A (by far the worst on economic issues):

...Sen. McCain: ...Tax cuts, starting with Kennedy, as we all know, increase revenues. So what’s the argument for increasing taxes? If you get the opposite effect out of tax cuts?

Greg suggests two appropriate follow-up questions for McCain:

1. If you think the 2001 and 2003 tax cuts increased revenue, why did you vote against them?

2. If you think tax cuts increase revenue, why advocate spending restraint? Can't we pay for new spending programs with more tax cuts?

As Greg has announced that he's an economic advisor to Governor Romney, I'll be very curious to hear Romney's response to a direct question about the circumstances under which he would be willing to increase taxes if he's elected President.

The question that I would like to have answered by any policy maker who voted for the tax cuts and believes that they have increased revenues is:

Why did you make them so small?

    Posted by on Saturday, March 10, 2007 at 02:25 AM in Budget Deficit, Economics, Politics, Taxes | Permalink  TrackBack (0)  Comments (36)


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