As we saw yesterday, Senate Minority Leader Mitch McConnell denies that the Bush tax cuts reduced revenue. This is a view which, as many have noted, has been disavowed even by most economists associated with the Bush administration. Unfortunately, the conservative elites who don’t embrace this view tend to be very selective about when they voice their opinions. For example, former CEA Chair Greg Mankiw doesn’t think tax cuts increase revenues and writes a popular blog on economic policy issues but has nothing to say about this controversy. Nor is there anything on the blog of former National Economic Council director Keith Hennessy. Ryan emailed Hennessy to ask if he had any comment on McConnell’s theory and we got a “Sorry, I can’t help you” in reply.
Back on May 4, New York Times columnist Ross Douthat did a good post about the “myths of the supply side” but now that these myths are back in the news he doesn’t have much to say about it. National Review ran the article Douthat was praising but neither the magazine nor the author of the piece has weighed in on the latest controversy.
So for many conservative elites, a pretty key issue of tax policy exists in an odd netherworld. Everyone thinks tax rates are important. Everyone thinks the quantity of government spending we can afford is important. But virtually all Republican Party politicians have beliefs about the relationship between these two that are at odds with the facts, and at odds with the views of leading right-of-center policymakers and elite commentators. But nobody seems to want to say that. And yet it’s not so difficult. Here’s exception-that-proves-the-rule Reihan Salam pointing out that (a) McConnel is wrong, and (b) if McConnell were right it would be hard to make sense of the rest of the conservative agenda since “if the public is convinced that we can afford high levels of spending by cutting taxes and contributing to the vibrancy of the economy, the case for restraining the growth of public spending collapses.”
This is what the country needs. A debate that acknowledges that higher spending will lead to higher taxes, and then tax cuts will force reductions in spending.