MORE CONSERVATIVE IN EVERY WAY:

Follow the leader: Can Bush live up to Reagan?: President Reagan's passing has resurrected a debate on the merits of huge tax cuts and resulting deficits. (David R. Francis, 6/14/03, CS Monitor)

In any case, Reagan did not follow the advice of the extreme supply-siders. Mr. Wasow notes that after the 1981 tax cuts produced a large federal deficit, Reagan collaborated with Congress to raise the average tax rate significantly in 1982, 1984, and again in 1987.

The result was that the 1983 deficit, which was the equivalent of a postwar high 6 percent of gross domestic product, came down to 2.8 percent of GDP when Reagan left office in 1989.

His successor, George H.W. Bush, raised taxes again in 1990. So did President Clinton in 1993. By then, none of the revenue losses from the 1981 tax cut remained, reckons Wasow.

Yet the economic collapse predicted by supply-siders in 1993 did not happen, notes Wasow. The economy boomed.

The deficit will run about 4.5 percent of GDP this year. The current president has made no move to raise taxes; rather, he wants to make his cuts permanent.

Whether that's bad or not depends partly on how rapidly the economy grows. Feldstein says that with a 3.3 percent real growth rate, the deficit would fall to 2.5 percent of GDP in five years. Wasow doubts that the budget picture will look that rosy, saying it depends on future tax decisions.

Especially in a time of war, such an annual deficit is negligible. And President Bush has subsequently cut taxes rather than raise them since his first big cut.

Posted by Orrin Judd at June 13, 2004 6:33 PM