One of the most common-supply-side talking points is that tax cuts always lead to higher tax revenues. It's not really true (revenues crashed after the 2001 Bush tax cuts) but even if it were, it's misleading: Tax revenues tend to rise over time as a natural result of inflation, rising population, and economic growth. Taken at its face value, the supply-side logic would imply that tax hikes always cause revenue to fall, which is ridiculous on its face, and which explains why supply-siders never mention this silly corrollary to their claim.
Until now! John McCain is a recent convert to supply-side economics and still working on getting the talking points down. Speaking yesterday in South Carolina, the straight talker:
proclaimed himself a believer in the notion that cutting taxes increases revenue for the government by spurring economic growth. “Don’t listen to this siren song about cutting taxes,” Mr. McCain told supporters gathered here under a tent in a driving rain. “Every time in history we have raised taxes it has cut revenues."
What? Every time? Okay, how about we go back and look at the last time taxes were raised -- 1993. It's true that conservatives predicted revenue would fall as a result of the tax hike. (Typical quote: "Higher taxes will shrink the tax base and reduce tax revenues" -- Newt Gingrich.) But it didn't exactly work out that way:
The amazing thing is that New York Times, which printed McCain's quote, made no effort whatsoever to ascertain the truth of his point. Just the typical, "McCain says earth is flat, and meanwhile in other news..." stuff. I realize that campaign reporting is hard, and reporters don't usually have time to check on the truth of candidate's statements. (And yes, this is a huge flaw with reporting, but that's another story.) But this claim is so obviously false it could have been refuted after maybe thirty seconds of research. Didn't the author (Michael Cooper) realize that tax hikes don't always, or even usually, lead to reduced revenue? Does he remember the 1990s? Is he aware that the federal government raised taxes and started collecting dramatically higher revenues during World War II? (Taxes were raised and revenues quintipled.)
The expecially annoying thing is that when Mitt Romney promised he could rebuild Detroit's auto industry, the media hammered him as a liar -- and it wasn't even a lie, just a matter of opinion, albeit a highly optimistic promise. Meanwhile, McCain disagreed and was treated to another worshipful round of press coverage. (The Washington Post credited him with telling "hard truths," which, again, takes McCain's side on an issue that's a question of opinion rather than fact.)
As my book explains, political coverage almost never bothers to check on the truth of candidate's claims about public policy. So, okay. But can they at least stop praising McCain as a brave truth-teller when he's totally reversed his position on the Bush tax cuts and now defends them with obvious lies?
--Jonathan Chait
