Barry Ritholtz takes on Art Laffer's recent opinion piece in the WSJ arguing that we're headed for economic disaster if the Bush tax cuts for the wealthy are allowed to expire:
Art Laffer: Make Up Your Own Facts Here, by Barry Ritholtz: To a man whose only tool is a hammer, pretty soon everything begins to look like a nail. I couldn’t help but be reminded of that aphorism as I read the most popular article on WSJ.com yesterday — Tax Hikes and the 2011 Economic Collapse — a screed on the Laffer curve and Supply Side Economics by none then than Art Laffer.
If either the WSJ OpEd page or Mr. Laffer had foreseen the most recent economic collapse we just lived through, or the credit crisis, or the housing collapse, or the derivatives problem, or any of the other economic disasters that befell the country I might give their warnings some credence. (I give credit to Laffer for discussing the possibility of a recession in Feb 2008 — way ahead of most right wing economists) But considering all this occurred with their man in the White House for 8 years, and they somehow missed it, leads me to one of two conclusions: Either they are extremely bad economists, or they are extremely partisan observers. ... Let’s not simply assume they are bad economists — instead, this looks like just another money-losing partisan screed.
In his OpEd, Mr. Laffer confuses causation with correlation, ignores market history, makes spurious argument, and simply make up crap as he goes along.
It is, to any thinking person, an embarrassment. ...[continue reading]...
In addition to the choice between keeping the tax cuts in place and letting them expire, another option is to shift the tax cuts from high income to lower income individuals.