The Agony of Debate: Voodoo Economics Cannot Fail, They Can Only Be Failed

The candidates on their way to tonight’s debate in Milwaukee, Wisconsin. By DonkeyHotey [CC BY-SA 2.0 (http://creativecommons.org/licenses/by-sa/2.0)%5D, via Wikimedia Commons
The verdicts are in, and there seems to be agreement that tonight’s Republican debate, hosted by Fox Business Network and the Wall Street Journal, was better and more substantive than the turd show on CNBC a few weeks ago. If you missed it, here’s a good recap at The Guardian‘s website.

Even though the moderators did an okay job of getting the candidates to debate actual positions with each other, there were still plenty of infuriating moments. For example, Carly Fiorina’s red-baiting routine is pure demagoguery that should have no place in American political discourse in 2015. She keeps trying to incite fear that “socialism” is destroying the country. Of course, nobody on the stage with her called her out on this nonsense. Real profiles in courage, these people.

Also, the flippant attitudes of the candidates, whether toward their confrontational postures that could risk war with Russia, or the plight of Americans trying to get by on minimum wage jobs, were appalling if unsurprising. And as usual, the candidates, moderators, and audience all proudly live in a fantasy world where President Obama has been a disaster and the facts don’t say what they want them to say.

From a policy perspective, the biggest takeaway from the debate is that the entire Republican field still believes in Ronald Reagan’s “supply side” economic policies. The theory behind “supply side” tax policy is that huge tax cuts will free up capital, which in turn will be invested and create economic growth that increases the tax base, which will more than make up for the revenue lost from ditching the previously higher taxes on the country’s wealthiest citizens.

The senior George Bush, running against Reagan for the Republican nomination in 1980, called Reagan’s economic policies “voodoo economics.” It turns out he was right. Economists have known for more than 30 years now that cutting taxes in order to raise revenue is exactly as stupid as it sounds. The theory behind the policy has failed to predict anything that has happened in the real world. In fact, the opposite is true. The theory predicted that the tax hikes associated with President Bill Clinton in 1993 would lead to economic disaster. The opposite happened. The theory predicted that President George W. Bush’s tax cuts would promote broad prosperity and increase tax revenue. The opposite happened.

I guess a theory that is always 100% wrong in its predictions is a kind of theory. In general, though, it’s a bad idea to empower people who believe nonsense and want to act on it. The country bought this stuff back when George W. Bush was selling it in 2000. Will we buy it again?

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