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View Diary: Ryan's six studies backing up Romney's tax plan turn out not to be six studies (74 comments)

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  •  Yep, debunked before (8+ / 0-)

    Romney has usually referred to it as "five studies" in the past, so apparently someone else has written a new blog post claiming to believe it will somehow work, making a sixth "study".

    The key to it really is the "magic growth asterisk". That is what the only "study" in the group has to assume to make it work. This is classic Republican voodoo economics. If we give rich people tax cuts it will set off a period of rapid economic growth that will bring in more revenue and therefore help offset the loss from lowering the rate. "Tax cuts pay for themselves", you see.

    The one actual study in the group accepts that there simply are not enough of those secret "deductions and loopholes" to cut at the top end to pay for the tax cut, but it squares the circle by introducing the magic growth asterisk. And this is what Paul Ryan was trying to refer to when he said in the debate that "it's been done before" and tried to mention Kennedy before being cut off by Biden. The Kennedy tax cut and the Reagan tax cut are the two standard Republican talking points to support the magic growth asterisk. There was a boom period after both had passed tax cuts, which helped cover the lost revenue.

    What they don't mention of course is that the Reagan 'boom' period was caused mostly by changes in Fed policy, not by the tax cut. Reagan passed his big tax cut and the recession continued for a year, and Reagan had to raise taxes to make up for some of it. Then the Fed adjusted interest rates which most economists say was the main driver for the boom that followed.

    They also don't mention the Bush tax cuts, since the magic growth asterisk simply did not work that time, though they also argued it would when trying to pass them. They also do not mention the Clinton tax increase, since that case puts the theory on its head. A tax increase was followed by a growth boom and more revenue. So you can argue that in some cases there has been a correlation with tax cuts followed by higher revenue, but in other cases there hasn't been. And even in the one or two cases where there has been a correlation, it's highly debatable if that correlation was actually causation.

    The magic growth asterisk denies this reality. It assumes that tax cuts always produce more growth (they don't) and that this growth was caused by the tax cuts (dubious). So what Romney/Ryan are actually proposing here is a giant gamble on this theory, but are trying to evade this in their rhetoric and pretend it's just factual.

    •  It would be very nice (0+ / 0-)

      for someone to ask them to name the '6 studies' and who did them.

      On camera, for the record.

      I am not religious, and did NOT say I enjoyed sects.

      by trumpeter on Fri Oct 12, 2012 at 04:22:15 PM PDT

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    •  Also take into consideration (0+ / 0-)

      that the top marginal rate in the early 1960s was much higher than it is now. They ask us "what rate is too high?" "At what point do taxes become confiscatory?'

      We should ask them "at what point is the top marginal rate too low?"

      All of the above doesn't take into account their other snake oil like the flat tax or the "Fair Tax" or "999".

      liberal bias = failure to validate or sufficiently flatter the conservative narrative on any given subject

      by RockyMtnLib on Fri Oct 12, 2012 at 05:21:16 PM PDT

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