Mitt Romney's prescription for our ailing economy is a 20 percent cut in the tax rate. He claims that cut will generate great economic growth, producing much of the additional tax revenue needed to close the deficit.
According to a study by the nonpartisan Congressional Research Service, there is no evidence for Romney's claim. No evidence. Surveying the historical record, this study shows that changes in tax rates do not correlate with the rate of economic growth.
However, tax rates do correlate with the deficit.
In the 1980s, President Ronald Reagan, using "supply-side economics," claimed that tax cuts, especially cuts for the rich, would produce prosperity for everyone and generate enough additional tax revenue to pay for themselves. In the Republican primaries that year, running against Reagan, George H.W. Bush derided Reagan's scenario as "voodoo economics." When passed, Reagan's cuts began our annual tradition of big deficits, but they did not prevent the next recession.
When President Bill Clinton assumed office, he and the Democratic Congress did the opposite of Reagan, passing a modest tax increase. Republicans predicted that increase would cause a recession, but it did not. It did, however, steer the government toward a balanced budget.
Then came the tax cuts sponsored by President George W. Bush and the Republican Congress. Those cuts contributed to truly massive deficits, but they did not prevent the recent recession.
Romney is the third recent Republican candidate to promise magic results from tax cuts. I call his proposal "abracadabra" deficit reduction.