Difference between revisions of "Supply-side economics"

From Conservapedia
Jump to: navigation, search
(Cut a lot of the garbage in the first few paragraphs)
(Kennedy's fiscal policy stance made it clear that he believed in pro-growth, supply-side tax measures)
Line 1: Line 1:
 
'''Supply-side economics''' is the idea that high [[marginal tax rates]] stifle economic growth and that, at certain points, cutting tax rates can increase the supply of goods and services without lowering tax revenues.
 
'''Supply-side economics''' is the idea that high [[marginal tax rates]] stifle economic growth and that, at certain points, cutting tax rates can increase the supply of goods and services without lowering tax revenues.
 +
 +
* Kennedy's fiscal policy stance made it clear that he believed in pro-growth, supply-side tax measures. [http://www.heritage.org/research/reports/2004/06/the-laffer-curve-past-present-and-future]
  
 
These ideas were taken up as a popular political movement during the 1980 election campaign, with [[Ronald Reagan]] proposing a modified policy of supply-side economics (although [[liberals]] disparagingly used the term "trickle-down" economics)--a term they have used against conservatives since [[William Jennings Bryan]] in 1896. <ref>  [http://www.investopedia.com/articles/05/011805.asp Understanding Supply-Side Economics], David Harper </ref> The decreased regulation begun in the late 1970s, together with lower marginal tax rates would provide enough savings and investment to pool new capital and drive economic growth. Manufacturers for example, would hire more people, produce more, and create more demand and economic activity.  The idea gained wide popular support, and became known as "Reaganomics".  
 
These ideas were taken up as a popular political movement during the 1980 election campaign, with [[Ronald Reagan]] proposing a modified policy of supply-side economics (although [[liberals]] disparagingly used the term "trickle-down" economics)--a term they have used against conservatives since [[William Jennings Bryan]] in 1896. <ref>  [http://www.investopedia.com/articles/05/011805.asp Understanding Supply-Side Economics], David Harper </ref> The decreased regulation begun in the late 1970s, together with lower marginal tax rates would provide enough savings and investment to pool new capital and drive economic growth. Manufacturers for example, would hire more people, produce more, and create more demand and economic activity.  The idea gained wide popular support, and became known as "Reaganomics".  

Revision as of 11:11, 17 December 2011

Supply-side economics is the idea that high marginal tax rates stifle economic growth and that, at certain points, cutting tax rates can increase the supply of goods and services without lowering tax revenues.

  • Kennedy's fiscal policy stance made it clear that he believed in pro-growth, supply-side tax measures. [1]

These ideas were taken up as a popular political movement during the 1980 election campaign, with Ronald Reagan proposing a modified policy of supply-side economics (although liberals disparagingly used the term "trickle-down" economics)--a term they have used against conservatives since William Jennings Bryan in 1896. [1] The decreased regulation begun in the late 1970s, together with lower marginal tax rates would provide enough savings and investment to pool new capital and drive economic growth. Manufacturers for example, would hire more people, produce more, and create more demand and economic activity. The idea gained wide popular support, and became known as "Reaganomics".

Most criticism came from the Left, but some on the Right was skeptical as well. George H.W. Bush during a campaign debate famously referred to it as "voodoo economics", due to the discarding of Keynesian orthodoxy. On the Left, it was seen as threat to the welfare state with the (feared) loss of federal revenues in tax cuts that had funded the failed War on Poverty programs for more than a decade. However, Reagan did not significantly cut back on the welfare state (that happened in 1996).

One key aspect of the program in 1982 was tax cuts for Research and Development (R&D) in high technology firms intended to make United States more competitive with Japanese electronics manufacturers which had dominated the industry since the late 1960s. Liberals were critical of the idea, claiming "tax cuts for business" only benefited "the rich"; however, the "trickle down effect" became a flood of prosperity in high tech industries starting in the 1980s and continuing on ever since.

Murray Rothbard wrote:

Specifically, Reagan called for a massive cut in government spending, an even more drastic cut in taxation (particularly the income tax), a balanced budget by 1984 (that wild-spender, Jimmy Carter you see, had raised the budget deficit to $74 billion a year, and this had to be eliminated), and a return to the gold standard, where money is supplied by the market rather than by government. In addition to a call for free markets domestically, Reagan affirmed his deep commitment to free­dom of international trade. [2]

See also

References

  1. Understanding Supply-Side Economics, David Harper

External Links