The American Spectator

p> PLAN B FOR CONGRESS br> Re: R. Emmett Tyrrell, Jr.’s Wild on the Supply-Side : /p>

Put me on Bob Tyrell’s team, please. What is wrong with some Republicans in Congress? Why can’t they see what is right before their eyes? Is it they fear the wrath and ridicule of the alien media nation if they step forward and support PERMANENT tax cuts?

p>Memo to Republican Congress: The Alien Media Nation already hates you and thinks you wear funny shoes — you might as well support what is good and right with our great country. Press coverage can’t get any worse. br> — Judy Beumler br> Louisville, Kentucky /p>

If the American people need to learn any lesson from economics, it’s that the federal government does not control the economy. So it’s distressing to read articles praising tax for stimulating the economy. There are three things wrong with such thinking: 1) It’s not true. 2) It increases the deficit. 3) It encourages Americans’ idolatrous worship of the federal government.

1) It’s not true. What about the powerhouse economy of the 1990s in which we endured record-breaking tax increases? Certainly a growing economy has followed tax cuts, but it has also followed tax increases, which should signal that taxes play a minor role in the economy. What causes economic growth? Investment in new or existing businesses and productivity increases only. All else is slight of hand.

2) It increases the deficit. It seems to me that supply-side economics began with the idea that a tax cut would increase federal revenues because under high tax rates, people will find ways to shelter income. In that regard, supply-side economics has proven correct. But the rest of the supply-side story is that tax rates have a tipping point and once you go below it, you actually reduce revenue from taxes. Based on the huge budget deficits, I’d guess that we have gone below that tipping point. Budget deficits cause the feds to borrow more money, so we’re not cutting taxes; we’re only pushing them off on our children. Once the tax rate reaches the optimum revenue producing level, which we’re probably below, the only honest way to cut taxes is to cut an equal amount of spending.