Supply-siders take some lumps
Bush and others who believe that tax cuts pay for themselves are skewered by critics.
At his Sept. 21 press conference, President Bush declared himself a "supply-sider," that is, someone who stresses the ability of tax cuts to encourage people to produce more goods and services and use resources efficiently.
The reaction by pundits wasn't so dramatic as when President Nixon told ABC's Howard K. Smith in early 1971, "I am now a Keynesian in economics."
Mr. Nixon was explaining his plan to propose a new federal budget that would wind up in the red. It was a fiscal policy John Maynard Keynes, a famed British economist, would likely have urged to stimulate a lagging economy. But it shocked the conservatives of Nixon's day. They charged him with being a "liberal," almost a naughty word to them.
Mr. Bush's statement is probably no surprise to today's moderate conservatives. They know that Bush encouraged a Republican-led Congress to pass six major tax cuts in the past six years, using the supply-side argument that the result would be faster economic growth and a more rapid increase in federal revenues. But conservatives aren't happy with huge annual deficits that have piled up during his White House watch, pushing the total outstanding federal debt to $9 trillion.
After all, Bush, Vice President Dick Cheney, and the Senate Republican majority leader Bill Frist had held that the tax cuts would pay for themselves. In a speech last year, Bush said, "You cut taxes, and the tax revenues increase."
To Jonathan Chait, who writes the TRB column for The New Republic, the president's declaration was probably a delight. His just-published book attacks supply-side economics, and there is nothing like controversy to stimulate sales.