On Tax Cuts and Keynes

In 2009, with the economy crashing around his ears, Barack Obama proposed a stimulus package that included both spending increases and tax cuts.  Virtually every respectable economist who has reviewed the history of the stimulus has concluded that the spending increases in particular had a relatively high multiplier, and that the economy would have been far worse without the legislation.  The GOP, however, derided the stimulus and claimed that it was a complete failure. The theory, of course, was that there was no multiplier, and that spending today only increased the deficit and resulted in less spending later, so a stimulus by definition only served to displace more productive spending by the private sector.

Today, with the unemployment rate below 5 percent and interest rates rising, the GOP is proposing tax cuts to increase existing levels of growth.  There is virtually unanimous Republican support for the idea of “dynamic scoring,” and some diehards will even say that the tax cuts will create so much growth, they will pay for themselves, even in the face of a mountain of evidence to the contrary.

I’m guessing you can see the inconsistency here.  You might even think there was another agenda at work.