If we really want to spur economic growth and balance the budget, we should INCREASE taxes.

In a September 2008 report, the Center for American Progress took a close look at the impact of Reagan’s tax cuts in 1981 and Bush’s tax cuts in 2001 compared to Clinton’s tax hikes in 1993 on investment growth, economic growth, income growth, wage levels, employment growth and the federal budget deficit and national debt. Findings. On every measure the country was better off after the tax increase than after the tax cuts.

• Real investment growth after the tax increases of 1993 was much higher than after the tax cuts of 1981 and 2001.
• Economic growth as measured by real U.S. gross domestic product was stronger following the tax increases of 1993 than in the two supply-side eras
• Average annual real median household income growth was greatest after the 1993 tax increases
• Wage levels also did better after 1993.
• Employment growth was weaker during the supply-side eras than during the post-1993 era.
• Federal budget deficits and national debt increased during supply-side periods and decreased following the 1993 tax increases.

So, deficit hawks, how about a tax increase to spur growth and bring down the deficit. It worked before.

Read the report at http://www.americanprogress.org/issues/2008/09/supply_side.html