Supply Side Economics… Vindicated?

Fight disinformation: Sign up for the free Mother Jones Daily newsletter and follow the news that matters.


Some tedious budget stuff. Recently, the Congressional Budget Office released a report noting that, thanks to an unexpected revenue surge, the deficit wouldn’t be nearly as bad this year as last expected, or as bad as last year. Not surprisingly, Stephen Moore jumped all over this in the Wall Street Journal, arguing that the CBO’s numbers proved the Bush tax cuts “worked” and are boosting economic growth. Supply-side magic!

Fine theory, it’s just not true. The Center on Budget and Policy Priorities breaks down the increase in revenues. First, they are not due to higher-than-expected economic growth—which would have at least suggested that the Bush tax cuts are “boosting” the economy—since growth has not been unusually rapid or stronger than projected. Second, many of the factors that did cause the increase are temporary. About $50 billion of the increase came because of the expiration of a business tax cut—in other words, more revenues were raised because of a tax hike. Surprise, surprise. Most importantly, the recent revenue boost hasn’t come close to making up for the massive loss of revenue caused by all of the tax cuts since 2000, which is what needs to happen for “Reaganomics” to work. For more on this, see Angry Bear here and here.

Tax cuts do not pay for themselves. The deficit is much, much larger than it would be without the Bush tax cuts. In some ways, who cares? As James K. Galbraith argues in Mother Jones this month, deficits don’t seem to matter all that much. The last four years have certainly skewered the argument that deficits “crowd out” investment and kick up interest rates. More to the point, if Congress repealed all of the Bush tax cuts and spent the money on health, education, and public infrastructure instead, that would be perfectly fine by me. Borrowing money to invest in the future is how good corporations operate, and it’s a sound way for the country to operate. But we’re not doing that. And that’s a problem, because persistently high deficits mean that eventually borrowing costs will mushroom faster than the economy can grow, and fiscal Armageddon will descend upon us. It will come down to taxes versus letting retirees pick through garbage on the street, and seniors, I’m told, don’t much like garbage. The numbers are inexorable, and supply-side hand-waving doesn’t change the basic problems at hand.

WE'LL BE BLUNT

It is astonishingly hard keeping a newsroom afloat these days, and we need to raise $253,000 in online donations quickly, by October 7.

The short of it: Last year, we had to cut $1 million from our budget so we could have any chance of breaking even by the time our fiscal year ended in June. And despite a huge rally from so many of you leading up to the deadline, we still came up a bit short on the whole. We canā€™t let that happen again. We have no wiggle room to begin with, and now we have a hole to dig out of.

Readers also told us to just give it to you straight when we need to ask for your support, and seeing how matter-of-factly explaining our inner workings, our challenges and finances, can bring more of you in has been a real silver lining. So our online membership lead, Brian, lays it all out for you in his personal, insider account (that literally puts his skin in the game!) of how urgent things are right now.

The upshot: Being able to rally $253,000 in donations over these next few weeks is vitally important simply because it is the number that keeps us right on track, helping make sure we don't end up with a bigger gap than can be filled again, helping us avoid any significant (and knowable) cash-flow crunches for now. We used to be more nonchalant about coming up short this time of year, thinking we can make it by the time June rolls around. Not anymore.

Because the in-depth journalism on underreported beats and unique perspectives on the daily news you turn to Mother Jones for is only possible because readers fund us. Corporations and powerful people with deep pockets will never sustain the type of journalism we exist to do. The only investors who wonā€™t let independent, investigative journalism down are the people who actually care about its futureā€”you.

And we need readers to show up for us big timeā€”again.

Getting just 10 percent of the people who care enough about our work to be reading this blurb to part with a few bucks would be utterly transformative for us, and that's very much what we need to keep charging hard in this financially uncertain, high-stakes year.

If you can right now, please support the journalism you get from Mother Jones with a donation at whatever amount works for you. And please do it now, before you move on to whatever you're about to do next and think maybe you'll get to it later, because every gift matters and we really need to see a strong response if we're going to raise the $253,000 we need in less than three weeks.

payment methods

WE'LL BE BLUNT

It is astonishingly hard keeping a newsroom afloat these days, and we need to raise $253,000 in online donations quickly, by October 7.

The short of it: Last year, we had to cut $1 million from our budget so we could have any chance of breaking even by the time our fiscal year ended in June. And despite a huge rally from so many of you leading up to the deadline, we still came up a bit short on the whole. We canā€™t let that happen again. We have no wiggle room to begin with, and now we have a hole to dig out of.

Readers also told us to just give it to you straight when we need to ask for your support, and seeing how matter-of-factly explaining our inner workings, our challenges and finances, can bring more of you in has been a real silver lining. So our online membership lead, Brian, lays it all out for you in his personal, insider account (that literally puts his skin in the game!) of how urgent things are right now.

The upshot: Being able to rally $253,000 in donations over these next few weeks is vitally important simply because it is the number that keeps us right on track, helping make sure we don't end up with a bigger gap than can be filled again, helping us avoid any significant (and knowable) cash-flow crunches for now. We used to be more nonchalant about coming up short this time of year, thinking we can make it by the time June rolls around. Not anymore.

Because the in-depth journalism on underreported beats and unique perspectives on the daily news you turn to Mother Jones for is only possible because readers fund us. Corporations and powerful people with deep pockets will never sustain the type of journalism we exist to do. The only investors who wonā€™t let independent, investigative journalism down are the people who actually care about its futureā€”you.

And we need readers to show up for us big timeā€”again.

Getting just 10 percent of the people who care enough about our work to be reading this blurb to part with a few bucks would be utterly transformative for us, and that's very much what we need to keep charging hard in this financially uncertain, high-stakes year.

If you can right now, please support the journalism you get from Mother Jones with a donation at whatever amount works for you. And please do it now, before you move on to whatever you're about to do next and think maybe you'll get to it later, because every gift matters and we really need to see a strong response if we're going to raise the $253,000 we need in less than three weeks.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate