A thought-provoking succinctly stated published letter to the editor of the Gloucester Daily Times, in support of Governor Duval Patrick, written by my husband Tom Hauck:
In their attempts to sway Massachusetts voters, Republican candidates, including Charlie Baker and Bill Hudak, offer the seductive elixir of tax cuts as the cure for our economic woes and the way to revitalize our economy. We have heard this merry tune before, and we should know that it hasn’t worked in the past and won’t work again.
“Supply-side economics” states that by lowering economic barriers for people to produce or supply goods and services, the result is economic growth. These barriers to supply are lowered not by investing, but by reducing income tax and capital gains tax rates, and by reducing government regulation. In theory, the result is an expanded economy that leads to an increase in tax revenue.
The Reagan administration was the first to implement supply-side policies. President Reagan promised that the government could maintain expenditures, cut tax rates, and balance the budget. It didn’t happen. Government revenues fell sharply from levels that would have been realized without the Reagan tax cuts. Reagan entered office in 1980 with a $79.0 billion budget deficit. By September 1988, the deficit had ballooned to $2.6 trillion – over thirty times as large. Meanwhile, a reduction in the top marginal individual income tax rate from 70% to 28% helped to widen the gap between the rich and the poor. The theory was that by helping the rich get richer, wealth would “trickle down” to the middle class. This was nonsense. The rising tide did not lift all boats, only the yachts of the wealthy.
Reagan’s successor, George H.W. Bush, was forced to raise taxes to offset the massive federal deficit caused by a recession and low tax revenues. For his courage he was (and still is) vilified by the far-right wing of the Republican Party.
Members of Reagan’s own staff have repudiated supply-side economics. Most recently, in a New York Times op-ed piece of July 31, 2010, David Stockman, director of the Office of Management and Budget under President Reagan, says, “If there were such a thing as Chapter 11 for politicians, the Republican push to extend the unaffordable Bush tax cuts would amount to a bankruptcy filing. . . It is unseemly for the Senate minority leader, Mitch McConnell, to insist that the nation’s wealthiest taxpayers be spared even a three-percentage-point rate increase.”
Republicans have a recurring habit of wanting to play Santa Claus to the voters. They hand out irresponsible tax cuts like candy at a holiday party. Then the economy sours and the Republicans stand back while Democrats come in and do the dirty work of restoring tax rates to former levels. Once the economy is healthy again, the Republicans howl about the terrible Democrats increasing taxes. It is a tiresome routine that voters should reject on November 2 in favor of realistic, progressive solutions to the challenges facing our state. We don’t need Santa Claus promising unsustainable tax cuts. To elect leaders willing to make tough decisions, vote for Deval Patrick and John Tierney.