Donald Trump loves the 1980s. After all, that was when his celebrity rose in New York, when Trump Tower was built, when The Art of the Deal was published, and when he first learned he could get away with flagrant racism (Central Park Five, anyone?). So we shouldn’t be surprised, as Paul Krugman points out in his Monday column, that Trump’s latest fumbling attempt at an accomplishment in his first 100 days, a “massive” tax cut plan, includes another greatest hit of the Reagan era. Supply-side economics, aka trickle-down economics, is the lie that deep tax cuts for the rich will spur them to jump-start the economy for everyone/support the poor/make unicorns shoot out of the sky.
It’s what Krugman calls “a zombie doctrine,” an idea conservatives repeatedly bring back from the dead despite massive and decades’ long evidence to the contrary.
The evidence begins as soon as the idea came to light. Sure, the U.S. recovered from an early ’80s recession, but as Krugman reminds us, that’s just as likely due to interest rate cuts as it is for tax breaks for those who don’t need them. Even President George H.W. Bush called it “voodoo economic policy.” He was quickly proven right by his successor, Bill Clinton, who raised taxes on the rich, and, Krugman notes, oversaw more job creation than Reagan did.
That wasn’t enough evidence for diehards, so when George W. Bush was elected, he conjured the zombie once more, and instead of jobs for everyone, America was rewarded with “lackluster growth followed by a severe financial crisis.” President Obama “reversed many of the Bush tax cuts and added new taxes to pay for Obamacare—and oversaw a far better jobs record, at least in the private sector, than his predecessor.”
If you’d prefer evidence at the state level, Krugman has that too, pointing to Kansas Governor Sam Brownback’s “‘real live experiment’ in conservative fiscal policy,” in which “the growth he promised never came, while a fiscal crisis did. At the same time, Jerry Brown’s California raised taxes, leading to proclamations from the right that the state was committing ‘economic suicide’; in fact, the state has experienced impressive employment and economic growth.”
So why, in the midst of all of this evidence at both the federal and state level, do Republicans insist on propping up trickle-down economics? As Krugman explains, it’s an old story: “Because it offers a rationale for lower taxes on the wealthy—and as Upton Sinclair noted long ago, it’s difficult to get a man to understand something when his salary depends on his not understanding it.”
Sure, Trump was supposed to be different, but are we really surprised that “a man who insists that he won the popular vote he lost, who insists that crime is at a record high when it’s at a record low,” is out of touch with reality?
It almost doesn’t matter whether or not Trump believes his own tax hype. He may, Krugman writes, “just be looking for something, anything, he can call a win—and it’s a lot easier to come up with a tax reform plan if you don’t try to make things add up, if you just assume that extra growth and the revenue it brings will materialize out of thin air.”
If only his fantasy games didn’t involve playing with Americans’ livelihoods.
Read the full column.