JONATHAN CHAIT JULY 6, 2011
Paul Ryan appeared on the Laura Ingraham show, and for my sins I listened. Obviously, the whole interview was pitched at a rock-bottom intellectual level, but this bit of doggerel especially stood out:
We're not gonna go down this path of taxing people. Look, if we thought tax increases would have worked, which we don't, then we'd be growing our economy already. Raising taxes on anybody in a weak economy like this number one, it doesn't work. But more importantly it takes the pressure off the real problem which is overspending.
Leave aside the fanatical assertions that any budget solution must be 100% on Republican terms, and the completely nonsensical embrace of Keynesianism as applied to tax policy as opposed to spending. (Any theory that asserts that it's especially bad to raise taxes during a weak economy also says it's bad to cut spending during a weak economy; likewise, any theory that focuses on the importance of long-term marginal makes no account of the state of the business cycle. Ryan mashes together two different theories incoherently.)
Let's focus on the boldfaced sentence. Ryan asserts that if tax increases worked, we'd be in a recovery already. I'm trying to figure out how many ways in which this is wrong. It's a lot of ways. First, we are in a recovery. It's a slow recovery from a deep financial crisis.
Second, we haven't imposed any tax hikes. The Bush tax cuts are fully in effect. If it were fair to conclude that any policy currently in effect must have failed because the economy is growing too slowly -- and it's not fair -- then that logic would be an indictment of Ryan's tax policy, not President Obama's.
Third, of course, it's not really fair to indict a set of policies by pointing to the after-effects of a financial crisis for which the policies have no relation. So if Obama had raised taxes in 2009, holding them responsible for slow growth since then would still be at best a wild exaggeration. (At least, though, it would make sense on its own terms, unlike Ryan's claim that something Obama has not done is responsible for the economy.)
And fourth, we do have an actual experiment with raising tax rates on the highest income. President Clinton did it in 1993. Paul Ryan wasn't in Congress yet, but he was working for his mentor, Jack Kemp, who predicted that raising taxes on the rich would reduce tax revenue, reduce the wealthy's share of the tax burden, and decrease growth. He was proven spectacularly wrong. In 2001, Ryan predicted the Bush tax cuts would increase economic growth and allow the government to pay off the entire national debt, and was again proven spectacularly wrong. Ryan can cling to his supply-side faith, but he certainly shouldn't be arguing on the basis of what recent events have proven.