Economic benefits of major tax cuts: explaining the myth

I never thought I would say this, but I am loving me econ class right now. The topic we are discussing in class right now is fiscal policy. Being a democrat, I always felt like big tax cuts and less government spending was not the best answer to reducing our deficit, but now I feel like I actually have a proven, statistical reason to support my "hunch."

I've learned that there are two major actions the government can take to boost spending or "jump start" the economy. It can either enact tax cuts (supply-side economics) or increase spending (demand-side economics).  However, according to my econ book, tax cuts will always have less of an impact than increasing governmental spending, because tax cuts indirectly affect the economy (b/c this affects people's income, and people most likely won't spend their complete income - some of it hopefully goes to savings. This does not affect GDP).  Governmental spending, on the other hand, is a direct injection of money into the economy resulting in increased demand, and increased GDP.

I think that reasoning is right. =/ If I explained this wrong, please help me!

Our optional reading included an article by Alan Murray, "'Dynamic' Scoring Ends Debate on Taxes, Revenue" (from 2003!). Now this article broke it DOWN.

It explained why so many people were arguing that tax cuts will be majorly beneficial to the economy (even though basic economics, as I just explained, already knows it isn't). There was this guy, Art Laffer, who met with Dick Cheney and Donald Rumsfeld in 1974 and "sketched a curve on a cocktail napkin suggesting that a cut in income taxes could provide such a spark to the economy that government revenues would rise, not fall" (Murray). This graph, however, did not have any numbers on either axes. Murray does a really nice summary of the debacle, but it comes down to this: the Congressional Budget Office (CBO) did an extensive study and used dynamic scoring (which was invented to figure out the "numbers" for the graph), but unfortunately those "numbers" did not prove anything. 

Murray says, "using some models, the plan would reduce the budget deficit from what it otherwise would have been; using others, it would widen the deficit. But in every case, the effects are relatively small. And in no case does Mr. Bush's tax cut come close to paying for itself over the next 10 years."

On top of that, the two "models" that did show an improvement in the deficit as a result of the supply side (tax cut) strategy were models that assumed "that after 2013, taxes would be raised to eliminate the remaining deficit."

His conclusion:
"Certainly, tax cuts can improve overall economic growth. And certainly, revenues may rise as a result. But at current levels of taxation, those effects are relatively small. There is no free lunch."

My conclusion
So, if we care about reducing the deficit, it looks like at some point we will have to start PAYING TAXES.