Defeating the Argument From Economic Growth

Jonathan Chait has noted that the last two decades of the American economy could have been a demonstration designed to humiliate supply-siders. (The conservative critiques of the 1993 budget plan have not, ah, aged well.) Via Crooked Timber, the weak-at-best correlation between relatively laissez-faire policies and economic growth can be observed in comparative data as well.

I think this is something that progressives need to pay more attention to. Mark Smith, a UW political scientist, has spent a lot of time looking at back copies of the National Review to study conservative rhetoric on tax policy. In the wake of Goldwater, conservative arguments in favor of tax cuts tended to be libertarian ones, linking tax cuts with increased freedom. Particularly starting with Reagan, the libertarian arguments became much less prevalent, and were largely replaced by arguments linking tax cuts to economic growth. The latter strategy had significantly more public appeal. It’s important, therefore, for progressives not to concede the premise that tax cuts produce economic growth; the evidence for this is, to put it mildly, weak.

The empirical case against the link between economic growth and tax cuts does not, of course, end the policy debate. The fact that the American economy prospered when the top marginal rates were essentially confiscatory does not, in itself, justify confiscatory tax rates (which I generally oppose as well.) But if conservatives are forced to defend tax cuts in libertarian terms, they will lose most of the time. The fact that the Bush tax cuts didn’t come anywhere close to producing the job growth their advocates claim, for example, is something that progressives can’t emphasize enough.