It’s tough to keep up with all the boogie men that liberal economists use to scare Americans away from tax cuts. It’s even tougher when the same people try to scare us with conflicting dangers back-to-back. Take, for instance, deflation, which is the current specter being used to haunt the American economy.
BuzzCharts has been around long enough to remember the old days, way back in two-triple-aught, when a fella named Bush was running against another fella named Gore. Now, this fella Gore had what they used to call an “economic advisor” who went by the name of “Blinder,” Alan Blinder, that is. Back then there were some people who believed that cutting taxes would cause inflation, and Blinder was one of them. Mind you, this is back in the days when a candy bar cost 89 cents. Anyway, Blinder wasn’t the only one who thought this. At the prestigious Brookings Institution, and a man named Peter Orszag cottoned to the same odd notion about tax cuts and inflation. Blinder and Orszag, of course, used to write for the New York Times, the paper that people used to read in those days.
Helping to stave off a resurgence of these old-fashioned ideas, BuzzCharts dug deep into the historic records — all the way back to 1960. The graph above is the result. BuzzCharts identified four major tax cuts in as many decades and found that in three cases the year-over-year percentage rate of change in prices fell. In the first case, after the tax cut of 1964, the rate remained flat, but it spiked in 1966, the year that LBJ imposed a 10 percent surtax to finance the Vietnam War. This means that in three out of four tax cuts, the rate of inflation dropped after the tax cut, and in the fourth case, it stayed the same until the next tax hike two years later.
Tax cuts inflationary? That theory should be ancient history.
— Jerry Bowyer is a talk show host on WPTT radio in Pittsburgh, Pennsylvania. He can be reached through www.BowyerMedia.com.