Supply-side economics captured the imagination of Ronald Reagan in 1979 and 1980. Cut taxes for the well off and their increased spending will fuel the economy, increase tax revenues, and the benefits will trickle down to the average family. Everybody benefits and the budget gets balanced in the process.
Reagan's presidential primary opponent, George Bush, called this voodoo economics.
Ronald Reagan, relied on supply-side theories in demanding a $400 billion dollar tax cut, in 1981. The tax cut was sold to the Congress by David Stockman, Reagan's director of the Office of Management and Budget. His supply-side team put together an alluring package of statistics and a "rosy scenario", which they said would unleash capitalist energies to pay for the needed tax break, a massive military buildup, boost the economy, and also balance the budget.
The Reagan tax cuts and military build up were approved by a Republican-controlled Senate and Democratically-controlled House. They did not deliver the promised utopia. Instead, President Reagan's river boat gamble clobbered the federal revenue base, and set off a chain of annual budget deficits unprecedented in American history. The supply side gambit is responsible in significant part -- say most honest analysts -- for an increase in the public debt since 1980, of some $3 trillion dollars.
Supply-siders like to blame the debt on a Democratic Congress, but that is a lie. First of all, the Republican's controlled the Senate until 1986. Second, every budget Reagan proposed included MORE spending than Congress approved. If Reagan had passed his budgets -- unaltered by Congress -- the deficits and the resulting debt would have been even larger.
Even David Stockman, Reagan's budget architect, admitted the whole rosy scenario was a fraud (Triumph of Politics, 1987) -- an intentional fraud.
Senator Dole, then Chairman of the Senate Finance Committee, has long been contemptuous of supply-side pipe-dreams. This he underscored in a speech at the Chamber of Commerce, reported in The Washington Post, March 5, 1982. In that speech he told businessmen the following good news/bad news joke.
"The good news," Dole said, "is that a bus loaded with supply-siders went over the cliff. The bad news is that there were three empty seats." Dole professed not to know who the three who escaped tragedy were, but "the bad news is they are huddling with the president," he said.
Rep. Jack Kemp (R-NY), perhaps the most ardent supply-sider in Congress, was a football quarterback, not an economist.
Now Bob Dole has made a ludicrous election eve conversion to supply-side economics, and even embraced the affable Kemp as his running mate. Badgered by former foes, 20-points down in the polls, and lacking the strength of his convictions, Dole made a desperate pass.
The bonus Kemp paid to get Dole to adopt him, and the baseless economic theory that Dole despised, was for Kemp to suddenly denounce affirmative action. Until this flip-flop, Kemp stood virtually alone within the GOP in defending opportunities for minorities, and remedies for past discrimination.
Can our country afford Supply-Side 2 -- VooDoo Revisited?
During the Reagan-Bush years, the rich got richer while workers' wages stayed stagnant. Main Street took it on the chin while Wall Street raked in billions with junk bonds and leveraged buyouts. Both the Federal Budget and American business was saddled with more debt than we ever imagined possible. This creates a situation where the Republicans can argue for more of the same. We can't afford to fully fund Head Start, childhood immunization programs, or college loans, but we have to give Wall Street a capital gains tax cut so they can get those junk bonds moving again.
This is short-sighted at best, self-serving hubris at worst. The bottom line is it is bad for average Americans. We have learned that nothing worth having, ever trickles down.
For candidate Dole's half a trillion dollar, 15 percent across-the-board, tax cut to work, he has to ..."come up with $832 billion in savings over six years -- enough to finance his tax cuts, plus $284 billion in additional payments beyond what's already budgeted to reduce the deficit," according to Howard Gleckman of Business Week, in the Aug. 18th issue. Since the GOP has already demonstrated it plans to force the Pentagon to accept billions of dollars more than it needs -- $7 billion in the current budget over what the Pentagon requested, which Republican war hero, Senator McCain, called a huge waist of taxpayer money -- the only place money can come from is programs to educate our kids, care for the sick, disabled, and elderly; and help those struggling in and near poverty.
Dole-Kemp and their allies will attempt to perpetuate the myth of the Reagan economic revolution. You know the one. The one where everything was fabulous until Bush's lips were forced to lie and he raised taxes. That too is a bunch of elephant crap. Job growth under Reagan was worse than under ALL recent Democratic Presidents. Supply-side tax policy produces debt and deficits, not real job growth that hard-working American families can hang on to.
In fact, if it would not have been for the 1.4 million government employees added during the Reagan years -- 183,000 of them federal employees -- his job creating performance would appear even more pathetic.
If the GOP really wants more stable, two-parent families, then let's protect the programs that help -- education, health care, child care, the earned income tax credit for families working their way out of poverty.
We cannot afford to continue to split our nation along the lines of the haves verses have-nots -- the well-trained verses the vulnerable. We cannot afford another round of VooDoo hooey.
All that said, tax cuts have an insatiable appeal to the American voter. To Clinton's credit, his tax cuts are modest and affordable. But best of all, they are targeted to produce stronger, more secure families.
Let's help Main Street for a change. Wall Street can fend for itself.