A Critical Take on Supply Side Economics

Not every economic argument in the campaign at the moment is about what to about the fast moving financial crisis. One of the defining economic battles over the last several decades has been the fight over supply side tax cuts and their role in spurring growth. The core of the debate: do such tax cuts help promote economic growth and thereby leads to greater tax revenues, rather than larger deficits. Such ideas were behind the 2001 and 2003 tax cuts proposed by President George Bush, as well as earlier supply side cuts put in place by President Ronald Reagan. Numerous studies by economists since then have raised questions about that theory, not least of which was a 2005 study by the Congressional Budget Office under Douglas Holtz-Eakin, currently the senior economic advisor to Senator John McCain.

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