In a remarkable Op-Ed in today’s Washington Post, top Reagan domestic adviser Bruce Bartlett has admitted that Republican tax policy is a “myth”.
In reality, there’s no evidence that a tax cut now would spur growth.
Bartlett takes dead aim at the Reagan tax cut as a cause of 1980s growth:
GOP tax mythology usually leaves out other factors that also contributed to growth in the 1980s: First was the sharp reduction in interest rates by the Federal Reserve. The fed funds rate fell by more than half, from about 19 percent in July 1981 to about 9 percent in November 1982. Second, Reagan’s defense buildup and highway construction programs greatly increased the federal government’s purchases of goods and services. This is textbook Keynesian economics.
And he’s not done yet! Regarding the effect of taxes on the rich, Bartlett examines the 1986 tax cut of the top marginal rate from 50% to 28%:
But there is no evidence showing a boost in growth from the 1986 act. The economy remained on the same track, with huge stock market crashes — 1987’s “Black Monday,” 1989’s Friday the 13th “mini-crash” and a recession beginning in 1990. Real wages fell.
I’d love to quote more, but I’m running up against fair use. Go read the whole thing.