David Stockman, former OMB director under Reagan, warned in the NYT on Saturday that extending Bush’s tax cuts would amount to “filing for bankruptcy.” Stockman goes on to say, “debt explosion has resulted not from big spending by the Democrats, but instead the Republican Party’s embrace, about three decades ago, of the insidious doctrine that deficits don’t matter if they result from tax cuts.”
As many may recall, Stockman was the one who blew the lid off of supply-side (a.k.a trickle-down) economics in the early 1980s. Talking to Washington Post writer Bill Greider, Stockman said: “It’s kind of hard to sell ‘trickle down,’ so the supple-side formula was the only way to get a tax policy that was really ‘trickle down…Kemp-Roth (the supply-side tax bill) was always a Trojan horse to bring down the top rate.” Stockman was saying this at the same time the Reagan administration was denying that the 1981 tax cuts favored the rich. Sounds familiar, doesn’t it?
In an interview on Meet the Press, Alan Greenspan, former Fed Chair and Ayn Rand apostle, said extending Bush’s tax cuts would be “disastrous.” Greenspan further stated that despite rhetoric from conservatives, tax cuts do not pay for themselves and that they need to be offset with spending cuts: “I’m very much in favor of tax cuts but not with borrowed money and the problem that we have gotten into in recent years is spending programs with borrowed money, tax cuts with borrowed money.”
Bush’s tax cuts are set to expire at the end of the year. If this happens, the federal deficit could be cut in half. The ten-year cots of the 2001 and 2003 tax cuts is between three and four trillion dollars, which is about half of the deficit at the end of that period.
We have a great newsletter, join below: