Hoyer: Supply-side economics still doesn't work
House Representative Steny Hoyer, D-Md., said Sunday that Congress needs to rein in spending - but argued that strategies for doing so based on the theory supporting supply-side economics had historically failed, and were not the way to go.
Speaking on CBS' "Face the Nation" alongside Rep. Paul Ryan, R-Wis., Hoyer lamented the failure of President Obama's bipartisan debt commission to win support last year for recommended spending cuts and tax increases, and argued that the Republican alternative was a path to failure.
"We have a big spending problem in Washington. That's inescapable. We do want to get spending under control," Hoyer told CBS' Bob Schieffer.
He argued, however, that some tax revenues were crucial to that goal.
"The reason I start with the commission - what did the commission do? Everything was on the table. Now, unfortunately Mr. Ryan and others have taken ... revenues off the table.
"He's right - we need to constrain and cut spending where appropriate both on domestic, on defense, on entitlements, so that we get a handle on spending," said Hoyer. "But at the same time, what the commission said - supported by three Republican members of the Congress ... we need also to have revenues as a component.
"So the problem I have with Paul [Ryan] and where Paul and I have the difficulty is, Paul is a [supply-side economics champion Jack] Kemp disciple, if you will," Hoyer continued. "Supply side economics, frankly, has failed. It failed in the Reagan administration where we incurred $1.4 trillion in new deficit."
Ryan countered with the argument that, in fact, the commission to which Hoyer referred had supported his philosophy.
"The commission recommended supply-side economics," Ryan argued. "It recommended lowering tax rates. That is pro-growth economics. Erskine Bowles [the commission's co-chair] is saying lower tax rates for economic growth.
"We think revenues should grow by growing the economy, and raising tax rates hurts economic growth," Ryan argued.
"With all due respect, that was your argument in 1981," Hoyer returned. "Not your personal argument, but Kemp's. Listen to me: That was the argument in 1981. That was the argument in 2001. Both times we had continuing, large deficit."
Ryan, however, argued that even Mr. Obama had turned against the commission - and said Republicans had taken the best ideas from it and included them in Ryan's controversial proposed 2012 budget plan.
"What happened was that the president disavowed his own commission. He put out a budget that did nothing to fix the problem," Ryan said. "Republicans since we didn't like all the details in the commission, we took a dozen or so ideas from the commission put it in our budget. We passed a budget to fix this problem, to pay off the debt, grow the economy, save Medicare, fix the social safety net. We put our plan out there. Then the president just launched another commission, the Biden commission, which is now underway.
"We need real leadership on this," he said.
