Jay Bookman

Opinion columnist and blogger with The Atlanta Journal-Constitution, specializing in foreign relations, environmental and technology-related issues

The dismal failure of supply-side economics on vivid display


Three years ago, in Kansas:

"Gov. Sam Brownback and his celebrity tax policy consultant, Arthur Laffer, said Tuesday that the income tax cuts Kansas lawmakers approved earlier this year will drive growth and make Kansas more competitive with surrounding states."

TOPEKA -- Kansas lawmakers will need to find a combination of about $400 million in tax increases or spending cuts for next year, according to the state’s budget director, in the face of revised revenue estimates....

The Kansas economy is growing at a slower rate than the national average, said Raney Gilliland, director of the state’s Legislative Research Department. Personal income is also growing at a slower rate in Kansas than in other states, he said.

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This week's major revenue revision is just the latest of a string of recurring budget crises in Kansas, forcing cutbacks in education, transportation and other basic services that have been so deep that even conservative Republicans are acknowledging they cannot be sustained. The increased growth and increased revenue promised by Laffer, the guru of supply-side economics, simply hasn't materialized.

In fact, the situation has become so dire that some Republicans, including Brownback, are finally, publicly acknowledging that they may have to -- GULP!! -- raise taxes to avoid complete disaster.

But it's important to point out that after causing the problem by passing major tax cuts that largely benefited the wealthy, Kansas legislators are eye-balling increases in the sales tax, gasoline tax and alcohol and cigarette taxes, all of which will increase the tax burden on working-class and middle-class Kansans while largely exempting the rich. It's really quite amazing.

And why does this matter outside Kansas? It matters because Laffer, the Heritage Foundation, ALEC and other nationally known conservatives, including Senate Majority Leader Mitch McConnell, had all cited Kansas as an important test case of conservative economic theory. If the experiment had produced the results that they promised, they would be celebrating it as validation of their theory. So its abysmal failure should be prominently noted as well.

As Brownback wrote in the forward to an ALEC-sponsored publication co-authored by Laffer in 2011:

"To those who doubt their research, I encourage you to watch Kansas during the next few years as we work to reset the state’s course on taxes and let our citizens once again be the engine of economic growth."

Most of all, it matters because most if not all of the 2016 GOP presidential field -- Jeb Bush, Ted Cruz, Scott Walker, Rick Perry, Rand Paul and others -- have met with Laffer seeking his guidance and endorsement for their own national economic plans. The plans released to date follow the flim-flam Laffer model almost down the line, with large tax cuts for the rich that are supposed to "jump start" an economy that is already wallowing in excessive capital formation.

It does not work. Time and again, it has been demonstrated that it does not work. But practical experience is apparently useless in challenging what has become theological doctrine.


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About the Author

Jay Bookman writes about government and politics, with an occasional foray into other aspects of life as time, space and opportunity allow.