Voodoo Schmoodoo: Supply-Side Econ Works Yet Again
For the rest of us, from a subscription-only Wall Street Journal editorial, here's more confirmation (bolds are mine):
Every tax-receipt increase quoted above is well in excess of the roughly 4% rate of growth in the economy.
House and Senate GOP conferees finally agreed yesterday on extending the 15% tax rate on dividends and capital gains for two more years through 2010. This means you can expect lots of media and liberal rhetoric about "the deficit" and "the rich," but the real news is how well these lower rates have been soaking the rich to fill government coffers.
..... These columns have been documenting this trend for the last couple of years, as well as the revenue tide flowing into state budget coffers. Overall state revenues climbed by 8% in 2004 and nearly 9% in 2005, according to the Census Bureau, and more and more states are piling up big surpluses. We've reported this news because politicians like to disguise these tax windfalls so they can spend it all with impunity and still plead poverty. Journalists contribute to this ruse by focusing their budget coverage on deficits, rather than on the spending and revenue trends that are the actual components of any budget.
The current revenue rush also refutes the prevailing Washington consensus that the federal deficit is the result of the Bush tax cuts. In fact, this revenue tsunami is the direct result of the expansion that took off in earnest at about the time the 2003 tax cuts passed. Lower tax rates have since had precisely the result that supporters predicted, though don't look for that story on page one any time soon.
This explains why tax-cut opponents have tried to change the subject from the sluggish growth they first expected, to the "jobless recovery" that soon became the 4.7% unemployment rate recovery, to lagging wage growth that is also now increasing. The latest liberal themes are allegedly rising "inequality" and allegedly exorbitant executive compensation. These are subjects for other editorials, but their current political and media prominence means the critics are conceding that they can't credibly call the tax cuts an economic failure. So they have to find other election-year talking points.
Supply-side econ works. Just don't look for The Mainstream Media to acknowledge it any time soon.
Cross-posted at BizzyBlog.com.