NYT editorial: Budget Battles: Tax and Spending Myths and Realities

Here are two numbers to keep in mind when thinking about the House Republicans’ budget plan: They want to cut spending on government programs over the next decade by $4.3 trillion. And they want to cut tax revenues over the same period by $4.2 trillion.

Government spending needs to be brought under control. But slashing vital services just to pay for more tax cuts is bad public policy and bad economics.

It won’t fix the deficit, no matter what the Republicans claim.

We’ve seen this play before. President Ronald Reagan promised that tax cuts would spur more economic growth and pay for themselves. During his tenure, the deficit hit what was then a peacetime high of 6 percent of gross domestic product, and he eventually decided that he had no other alternative but to raise taxes to try to close the gap.

The Clinton years disproved the notion that higher taxes would inevitably stifle economic growth, or cost politicians their jobs. Taxes were raised in 1993, including higher income tax rates on the wealthiest. The economy was strong, and the stock market surged. Taxes were then cut in 1997 in a deal with the Republican-controlled Congress, but by then the combination of higher tax rates on the wealthy, a strong economy and a rising stock market was boosting revenues significantly.

(More here.)

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