This is the Cato Daily Podcast for Monday, August 5th, 2013. I'm Caleb Brown.

President Obama is pushing a grand bargain on tax reform, but history suggests that grand

bargains often fail to deliver promised spending cuts.

Jeff Myron, a senior fellow at the Cato Institute, offers his thoughts. The new grand bargain that President Obama has announced in the past few days

involves his agreeing to a cut in the corporate income tax rate.

The number I've seen in the headlines has been from 35% to 28%, although that's presumably

up for negotiation.

In exchange for, Republicans agreeing to a number of policies that Democrats like.

One is a minimum wage hike in addition to the ones we've had recently and the others

are additional spending programs such as on jobs retraining and things like that.

So we had I guess something of a grand bargain in 1986 with regard to tax reform.

Tax rates did not rise, but a bunch of loopholes were eliminated,

and this was broadly bipartisan.

It was.

I think, the way I think about that is that Reagan cut taxes, Reagan and Congress cut taxes in the early 1980s,

one of the arguments was that tax cuts would starve the beast that those big decreases in revenue would force Congress to limit spending

It turns out that and it would be nice if that were true for libertarians but the evidence doesn't seem to back it up. So Bill Niscanin, one of Cato's

founders, examined this a couple decades ago and found that after Congress cuts taxes

within a few years it raises them back up again so they don't really cut spending they

just raise taxes later to make up for the lost revenue. Two economists at

UC Berkeley, Christie Romer and David Romer examined this again a few years

ago they come from a very different part of the

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