A government report released earlier this week confirmed that the American economy will see a recession in 2008. Families across the country are facing foreclosure on their homes, and the dollar is at record lows. In an article in The Chronicle Review, David Glenn asks why presidential candidates, especially Republicans, still propose tax cuts based on the now-debunked supply-side economic theory:
The hopes of the supply-side theorists of the 1970s, who proposed that revenue would often rise after tax cuts, have been thoroughly dashed by the last 30 years. Federal revenue fell after Ronald Reagan's 1981 tax cuts and again after George W. Bush's 2001 cuts. The vast majority of economists now say that tax cuts must be matched by spending cuts, or deficits will ensue.
For an answer, he turns to The Permanent Tax Revolt: How the Property Tax Transformed American Politics, released this week by Stanford University Press. Author Isaac William Martin argues that “Republican political leaders (falsely but successfully) interpreted Proposition 13's success in California in 1978 as a broad mandate for cutting income taxes as well as property taxes,” a policy that has shaped and symbolized the party every since.
Martin’s showcasing of how the Republican Party came to so deeply associate itself with tax cuts helps us understand why President Bush stands so firmly by his economic policies in the face of economic upheaval.