"McCain Re-Embraces Supply-Side Theories That Are ‘Beyond The Reach Of Economic Science’"
In 2000, while he was first running for president, Sen. John McCain (R-AZ) broke from conservative orthodoxy and argued against “giving tax cuts for the rich.” Explaining his change of heart, McCain told The New Republic’s Jonathan Chait that he “didn’t pay nearly the attention to those issues in the past” that he should have and that he was only “a supply-sider” because he didn’t understand the issue:
“In the interest of full disclosure, I didn’t pay nearly the attention to those issues in the past,” he recalls. “I was probably a `supply-sider’ based on the fact that I really didn’t jump into the issue.”
But now that McCain has clinched the Republican nomination, he’s helping supply-side economics make “a political comeback.” Last week, the New York Times reported that as McCain pushes for the Bush tax cuts to be made permanent, “his camp increasingly cites as justification the supply-side effect on upper-income families.”
Like his previous support for supply-side economics, McCain’s re-embrace appears to also be more faith-based than fact-based:
“What really happens is that the economy grows more vigorously when you lower tax rates,” said Kevin Hassett, an adviser to the presumptive Republican nominee, John McCain, and the director for economic policy studies at the conservative American Enterprise Institute. “It is beyond the reach of economic science to explain precisely why that happens, but it does.”
As Brendan Nyhan noted in January, McCain has repeatedly pushed debunked supply-side theories while on the campaign trail:
“Don’t listen to this siren song about cutting taxes. Every time in history we have raised taxes it has cut revenues.” — McCain, [1/17/08]
“I would suggest that most economists agree that there was an increase in revenues… associated with the tax cuts.” — McCain, [12/5/07]
“Tax cuts—tax cuts increase revenues. The tax cuts, the revenues increased because of it. The spending outpaced the tax cuts.” — McCain, [11/27/07]
“Tax cuts, starting with Kennedy, as we all know, increase revenues. So what’s the argument for increasing taxes? If you get the opposite effect out of tax cuts?” — McCain, [3/5/07].
As the New York Times points out, tax revenues saw an “average annual increase of 6.5 percent in the eight years of the Clinton administration” while “the annual per capita revenue from income taxes fell 1 percent under President Bush.”
The Center for American Progress Action Fund’s Robert Gordon and James Kvaal recently noted that McCain’s tax cut proposals would “cost the federal government more than $2 trillion in tax revenue over 10 years.”