good news/bad news
Some good economic news from yesterday: The Gross Domestic Product grew at a surprisingly strong 2.4% in the second quarter, and new unemployment claims were below the 400,000 mark for the second week in a row.
Unfortunately, as CalPundit and others have pointed out, the GDP figure takes into account the massive outlay of deficit spending to fund the second Gulf War, and thus is a one-time boost (unless Bush has any more wars up his sleeve...). And it turns out that while the unemployment rate is indeed dropping, it's because of job seekers giving up the search, not because companies are actually hiring. After all, the recent dip in new claims just means companies aren't laying people off quite as much -- not exactly something that'll boost consumer confidence. Quite the opposite, in fact.
Meanwhile, Matthew Yglesias has an excellent chart showing how the growth in tax revenue due to tax cuts never seems to materialize.
The fact that a large number of people were willing to fall for the supply-side con in the 1980s is disheartening, but until the thing had been tried I suppose it's understandable that many would succumb to wishful thinking. Given the fact that this policy has already been implemented and demonstrably failed, however, I find the continued adherence of some to this superstition to be quite puzzling.
Actually, it's easy enough to understand: The adherents of tax cuts for the rich don't really expect the results they promise in order to sell them, they just know they can't sell them without making those promises. Even Bush has acknowledged that his tax cuts are at least partly responsible for the defecit.) And as always, Brad De Long is a great source for economic perspective.