In 1993, when Bill Clinton proposed an increase in the top tax rate from 31 percent to 39.6 percent, Kudlow wrote, “There is no question that President Clinton’s across-the-board tax increases … will throw a wet blanket over the recovery and depress the economy’s long-run potential to grow.” This was wrong. Instead, a boom ensued.So there's one massive error.
Rather than question his analysis, Kudlow switched to crediting the results to the great tax-cutter, Ronald Reagan. “The politician most responsible for laying the groundwork for this prosperous era is not Bill Clinton, but Ronald Reagan,” he argued in February, 2000.I don't think this is completely absurd, I mean, who knows what the time lag is between actions taken by the government and economic results? But on the other hand it completely contradicts what he had been saying just a few years before.
By December 2000, the expansion had begun to slow. What had happened? According to Kudlow, it meant Reagan’s tax-cutting genius was no longer responsible for the economy’s performance. “The Clinton policies of rising tax burdens, high interest rates and re-regulation is responsible for the sinking stock market and the slumping economy,” he mourned, though no taxes or re-regulation had taken place since he had credited Reagan for the boom earlier that same year.You see the pattern.
By the time George W. Bush took office, Kudlow was plumping for his tax-cut plan. Kudlow not only endorsed Bush’s argument that the budget surplus he inherited from Clinton — the one Kudlow and his allies had insisted in 1993 could never happen, because the tax hikes would strangle the economy — would turn out to be even larger than forecast. “Faster economic growth and more profitable productivity returns will generate higher tax revenues at the new lower tax-rate levels. Future budget surpluses will rise, not fall.” This was wrong, too.Was it ever. I remember these debates well. Kudlow and company were vehement that the CBO's economic forecast was not nearly rosy enough, and that people saying "but what if we have a recession?" were foolish Cassandras. Instead, that forecast proved far too rosy, we got a recession, and the deficit soared.
Kudlow then denied we were in a housing bubble and denied that mortgage bonds posed any risk to the economy. When Obama came in he joined the chorus arguing that the stimulus plus the Fed's "quantitative easing" would lead to high inflation, and in fact he spent the next eight years arguing that high inflation was just around the corner, that the CPC was somehow underestimating real inflation, and so on.
It is pretty hard to imagine how any mainstream pundit could end up with a worse record. So of course he is due for a high profile job in the government. . . .
We need to get away from treating economic questions as matters of faith – tax cuts always increase revenue, a higher minimum wage is always better – and use some data to figure out what is really going on.