The Flinchum File
Thoughtful Economic Analysis and Existential Opinions

The Fundamental Flaw

06/13/2019

Supply-side economists argue that tax revenues will increase if you cut tax rates.  Since passage of the Trump tax cut, revenues have indeed increased . . . a whooping 2%.  Unfortunately, expenses or spending increased 9%, primarily for federal retirement and health benefits, the military, and interest payments on the national debt.  (Notice that only government workers received increased entitlements.)  After some accounting adjustments, our budget deficit increased 19% for the first eight months of this fiscal year, despite the revenue increase.

The fundamental flaw of Supply-side economics is the assumption that spending remains steady.  How realistic is that?

In the real world, a tax cut means our grandchildren go deeper into debt.  Funding increased spending with debt is cowardly and heartless!

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