Jonathan Chait lucidly explains Republican thinking on taxes– i.e. that they should always be cut– and why it’s crazy:
In the Republican view, tax cuts do not increase deficits, because they either 1) produce enough growth to increase revenue, or 2) reduce revenue and thus “starve the beast” of spending, or, somehow, both. A corollary holds that tax hikes do not reduce deficits, because they either 3) decrease economic growth and thus decrease revenue, or because 4) the added revenue will cause the government to spend more money. Grassley was expressing idea #4.
This is how discussions of tax revenue that involves any Republican or almost any member of the conservative movement has gone over the last two decades. The discussion is completely detached from reality. All four elements of the Republican tax catechism have been utterly destroyed by empirical reality. It may be theoretically possible for tax rates to be high enough that tax cuts could produce higher revenue, but we’re nowhere close to that point. Nor is there any evidence that a lack of revenue will cause the government to stop spending money. (Look around.) Indeed, evidence points in the opposite direction, with rising revenues correlating with falling expenditures, and falling revenues with rising expenditures.
Interestingly, he’s found an actual Republican who agrees– Kevin Williamson, who’s written a surprisingly angry piece in the National Review called “Goodbye Supply Side“:
The hot action is on the spending side of the ledger, and nobody wants to touch it. The problem with magical supply-siderism is that it gives Republicans a rhetorical and intellectual framework in which to ignore spending — just keep cutting taxes, the argument goes, and somebody else will eventually have to cut spending. The results speak for themselves: Tom DeLay and Dennis Hastert and Trent Lott and Bill Frist all know how to count, but, under their leadership, Republicans spent all the money the country had and then some. Deficits boomed, and Republicans’ claim to being the responsible britches-wearing adults when it comes to spending got unpantsed. Cutting taxes is easy. Cutting spending is hard.
This is one of the points I made in my piece on libertarianism— making tax cuts into a religion simply produces irresponsible government. The Tea Party is a fake; it has no plan to reduce the spending that adds up, and indeed opposes touching any major spending item; it just wants big government for free.
Chait compares Williamson’s column to Khrushchev’s secret speech denouncing Stalin. I think Chait gets a little overexcited here. Khrushchev’s speech was a big deal because he was in charge. Tea Party doctrine isn’t going to change because of one honest article in a hifalutin magazine.