[quote=EconProf]Actually you are right, SK, tax cuts are Keynsian in the sense that they aim to spur aggregate demand by consumers. Conservatives would argue that if you must have demand stimulus, do it with tax cuts rather than new permanent government programs and handouts.
Tax cuts aimed at businesses are more aimed at stimulating investment in new plant and equipment.[/quote]
And you’re really a professor? Go back and read what Keynes said about when tax cuts were appropriate and when they weren’t. The early Bush tax cuts? Maybe, at least the argument could be made. And it was made back in 2001 and 2002, mostly by the left, pointing and laughing at Bush.(Since most of the cuts didn’t go to where the money would be spent, the argument could also be made that they weren’t Keynesian at all.) The elimination of those tax cuts in 2004 to 2007 that never happened? Not Keynesian. The infrastructure spending that didn’t happen in 2000-2002? Not Keynesian. Wars that weren’t paid for during in a stable economic environment? Not Keynesian.
Keynes argued for tax cuts during a recession, in order to get more money into the hands of consumers, and to spur investment. The problem is that the tax cuts have been mostly misdirected. And that there is no shortage of capital for investment, so tax cuts on those that may invest, won’t help. They already have capital to invest and they’re not doing it. And it has zero to do with government policies and regulations. Big companies bitch and moan and deal with regulations. It doesn’t stop expansion. It has everything to do with uncertain demand.
It hasn’t been Keynesian policy for the last 10 years. It’s been failed supply side, the biggest fraud of the last 40 years.
