Newsom's faith-based economic plan

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By Steven T. Jones
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The theory that cutting taxes on corporations and the rich creates wealth that eventually trickles down to help everyone -- a policy that drastically widened the income gap -- is back, and in San Francisco of all places.

Is it “ideological” to question whether the business tax cuts that Mayor Gavin Newsom is proposing will exacerbate the city’s huge budget deficit, potentially doing far more harm than good? Press Secretary Tony Winnicker, who finally returned my call about the proposal, told me that it is.

But Winnicker denied that conservative economic ideology is behind Newsom’s belief in the healing power of business tax cuts, calling it simply “practical” and telling me, “The mayor doesn’t share your hostility toward the private sector.”

That may be true, but I don’t share his hostility toward the public sector, which would lose even more of the “jobs” that Newsom claims to value so highly in order to pay for his experiment in trickle-down economics. Winnicker grudgingly acknowledged that short-term fiscal reality – and the fact that they didn’t study how much revenue will be lost before proposing the plan, or in the year since it was first pitched -- but argued that it will somehow help the city over the long run.

“We believe that enacting these tax incentives, particularly the payroll tax credit for new hires, is one of the single biggest things we can do for economic growth,” Winnicker said.

But he couldn’t cite any evidence supporting that belief, which is a matter of faith for economic conservatives. Yet even the city’s fairly conservative economist, Ted Egan, says that reducing government spending in order to cut business taxes just isn’t smart.