A Deficit of Reality
The Knoxville News-Sentinel opines today about a federal budget rule it says helped Congress reduce deficits in the 1990s. The KNS only misses two facts. 1. Deficits were reduced because of rapid economic growth spawned by the Reagan-era tax cuts in the mid- and late 1980s resulted in an almost geometric progression of federal revenue in the 1990s. 2. A requirement that tax cuts must be "paid for" via other tax increases or spending cuts is based on static economic analysis that assumes tax cuts have no positive impact on economic growth. The Reagan era proved the opposite. Tax cuts can result in more government revenue as the economy grows.