Now that the incoming data suggests that last year's tax cuts actually increased revenues, will the liberal media and left-leaning economists finally admit they were wrong?
As the tax cut plan was being debated, the bean counters at the Congressional Budget Office (CBO) where pontificating that a lower levy upon the American people, say $1.5 trillion, would ipso facto result in 1.5 trillion fewer dollars flowing into the federal coffers.
That’s all the liberal media and Democratic pundits needed to hear. Left leaning editorialists from The New York Times to The Washington Post, to the liberal economists such as Paul Krugman, to the progressive politicians — starting from Nancy Pelosi and Chuck Schumer — down to every single Democrat in Congress, parroted this nonsensical, unsubstantiated conclusion that lower taxes would lead to lower revenues, and thus a higher deficit.
But fiscally conservative growth advocates insisted that these pessimistic predictions were brutally flawed, steeped in partisanship, and contrary to the historical backdrop. Tax cut proponents confidently declared that lower taxes would actually increase the amount of revenues collected by the government. This was not voodoo or wishful thinking; it was a prediction based upon past results. We already had evidence — not once, but numerous times — that lowering taxes increases revenues.
The two most recent examples were from the Democratic Kennedy administration and the Republican Reagan tenure. Kennedy’s mantra, "a rising tide floats all boats,” was proven correct by the fact that the middle class benefited greatly after he cut taxes across the board between 20 and 30 percent. The cut led to eight years of an approximate 5 percent annual growth. And, according to the Heritage Foundation, revenues increased from $94 billion in 1961 to $153 billion by 1968 — a 62 percent increase (32 percent adjusted for inflation).
Reagan’s tax cut delivered similar economic expansion and increases in tax revenues.
(As a side note, few were complaining of income inequality, because most everyone was benefiting from the boost to the economy. Yes, wages rose for the upper levels by 12.2 percent from 1983-1989, but the poor also saw their wages soar 11.8 percent.)
It’s not brain surgery. Cutting burdens on businesses unleashes investment, which fuels jobs and increases profit margin and higher wages, while lowering welfare dependency. The evidence was hitting us right in the face, but liberals didn’t want to acknowledge it. Instead, they looked at the fact that the deficit grew under Reagan, as it did last year on Trump's watch.
While it is true that the deficit rose in the eighties, it was not because of lagging revenues, which actually grew by 54 percent from 1983 to 1989 (28 percent after inflation), but rather because Washington chose to dramatically increase spending during that same period (primarily in the area of defense).
Likewise, Trump’s deficit was the result of his massive increase in defense spending, coupled with a caving to Democrats’ demands to significantly increase spending on domestic programs (which he should have vetoed).
But the facts show liberals simply cannot blame the increased deficit on the tax cuts. The CBO reports that tax revenues in April totaled $515 billion, a 13 percent rise in receipts over last year.
MoneyWeek reported that the $218 billion monthly surplus (revenues over expenditures) this April was the largest ever, with the previous record being $180 billion in 2001. (April is always the one surplus month.)
The media will not be able to duck the upcoming figures on the growth in GDP, which many are predicting will come in rather robustly (which again will blow away the inaccurate predictions by the CBO), but will they finally admit that they were just plain wrong in their dire assumptions that the tax cuts would lead to lower revenues? Don’t hold your breath!
It’s awfully hard to label fiscal conservatives as being heartless ogres when their tax cuts actually wind up making the poor and middle class so much better off than they were in the days of liberal tax increases.
Steve Levy, former New York state assemblyman, Suffolk County executive, and candidate for governor, is now a distinguished political pundit. Levy's commentary has been published in such media outlets as Washington Times, Washington Examiner, New York Post, Albany Times, Long Island Business News, and City & State Magazine. He hosted “The Steve Levy Radio Show" on Long Island News Radio, and is a frequent guest on high profile television and radio outlets. Few on the political scene possess Levy’s diverse background. He’s been both a legislator and executive, and served on both the state and local levels — as both a Democrat and Republican. Levy published Bias in the Media, an analysis of his own experience, after switching parties, with the media's leftward slant. Levy is currently Executive Director of the Center for Cost Effective Government, a fiscally conservative think tank. He is also President of Common Sense Strategies, a political consulting firm. To learn more about his past work and upcoming appearances, visit www.stevelevy.info. To read more of his reports — Click Here Now.
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