THIS week, Democrats are meeting in Philadelphia to nominate Hillary Clinton as their candidate for the presidency. In between the speeches, party business, musical acts and other convention agenda items, the party has been airing short, funny little videos, starring former members of Barack Obama's economic team. Here's one that ran last night, featuring Gene Sperling, who most recently served as the director of Mr Obama's National Economic Council:

Comically, it's not bad. Politically, it maybe works, or maybe it doesn't; who knows. But economically this is a little funny. Donald Trump has all sorts of disastrous economic ideas, such as they are. But would massive, permanent tax cuts for the very rich, and the debt they generate, "tank the economy", as Mr Sperling says?

There might be some small, positive supply-side effect to the tax cuts, but the history of the last few decades suggests we shouldn't expect anything massive; indeed, the effect of the tax cuts on incentives would probably be lost amid other influences...Continue reading