Lower taxes for rich people is, indeed, the standard GOP prescription for growth. Bob Dole promised it in 1996. Texas Gov. George W Bush promised it in 2000. In 2001 and 2003, he delivered it. We got the weakest economic expansion in American history, followed by a plunge into the worst recession since World War II. Then John McCain campaigned on lower taxes for rich people. Then in December of 2010, Senate Republicans insisted on lower taxes for rich people as the price for avoiding tax hikes on the middle class. Maybe you think the only problem with this strategy is we haven’t tried it forcefully enough. But what does it have to do with Texas?I don't think that Texas is any better than the Midwest in the early 20th century or California at mid-century. The Sunbelt will grow until it doesn't, then people will move to someplace else, maybe a place with ample water supply, such as the Great Lakes region, or upstate New York. The idea that Texas has figured out the right way to grow is just as wrong as the idea that California figured out the right way to grow in the fifties and sixties.
In the actual Texas, as we’ve seen over and over again, there’s been plenty of increases in government spending and plenty of public sector job creation. There’s been plenty of federal spending, and plenty of stimulus money. And that’s all because Texas’ population is growing very rapidly. More people equal more private investment to provide the goods and services those people want, and it also means more public sector spending and the employment that comes with it. But is President Perry going to engineer a national population boom by cutting marginal income tax rates on high-income individuals? It’s difficult to see how that would work. The American government really could engineer a population boom by adopting a more liberal attitude toward international migration, but that’s not on Perry’s agenda or anyone else’s as far as I can see. So beyond that, it’s just the case that a governor and a president are faced with different situations. “Let’s get a lot of people to move here” is a totally viable economic growth strategy for a governor to pursue. But it doesn’t work as a national policy agenda. So you’re left with the same old same old tax cuts for the rich.
Tuesday, August 30, 2011
Population Growth And Economic Growth
Yglesias makes that point about the Texas economy:
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