Settembri --
In another thread, you mention that I didn't answer to this post, so here's my answer. Sorry about the delay.
First of all, Mr. Niskanen is a fine economist, I like the Cato Institute, and I frequently link to its policy analyses myself. But on this specific issue, Mr. Niskanen is hardly an unbiased source. As Mr Reagan's chief economic advisor, he has a strong incentive to make Mr.Reagan's (and his own) track record look good. Did these incentives affect your trust in the Policy Analysis in any way?
Second, let me point you to a table of
historical budget data from the non-partisan Congressional Budget Office. As you see, the tax cuts of both Kennedy and Reagan look a lot smaller when you look at the total amount of taxes, rather than just the top bracket of the income tax like Mr. Niskanen does. If you look at the whole thing, it's perfectly understandable how the normal rate of long-term growth offset the revenue loss from the tax cuts. Your earlier assertion was true in the narrow sense that absolute tax revenues grew
after the tax cuts, but that doesn't mean they grew
because of the tax cuts.
Third, consider that Bill Clinton raised taxes early in his term. Your supply-side economics would predict that this would make GDP growth cave in. It didn't. Bill Clinton's growth record is at least as impressive as Ronald Reagan's, especially since Ronald Reagan started from a much deeper recession.
Fourth, remember on what supply siders and the Keynesians actually differ. Nobody doubts that you can temporarily boost GDP growth by cutting taxes in a recession. But the the supply siders claim they can do more than that. They claim that cutting taxes boosts long-run growth. This claim can be refuted by subtracting business cycle effects from Ronald Reagan's growth record. Macroeconomists have done it, and you can look at the result in a textbook of your choice (Samuelson/Nordhaus on the left, Mankiw on the right). It turns out that there was no speedup of long-term growth during the Reagan administration.