HOW W. WON THE TAX DEBATE.(Brief Article)

When Ronald Reagan advocated large tax cuts in the 1980s, he was unconcerned about the possibility of reducing federal revenues. The economic benefits of his plan would be so large, he argued, that revenues would actually rise over time in response to lower marginal tax rates. Economists have studied the actual results fairly carefully, and there is partial though not decisive evidence supporting Reagan's view. Studies find that business investment and economic growth do increase in response to lower tax rates, though not so much you'd want to bet your soul on such "supply-side" effects being large enough to increase total revenues.

George W. Bush decided early in his campaign to make a Reaganesque tax cut the centerpiece of his economic plan. From the outset, however, he and his policy team made an interesting decision: Make no mention of supply-side benefits. The effect of the tax cut would be estimated according to the archaic static analysis used by the Congressional Budget Office, and would show a large federal revenue reduction. So how would the cut be sold? You heard the argument: "Money is flooding into Washington, and candidate Bush wants to give some of it back to taxpayers before greedy politicians spend it."

This decision may go down as the smartest policy maneuver in the campaign. Why? Because while Americans may have a hard time following the technical debate about the long-run benefits of tax cuts, they know quite well how easy it is for tax money to be wasted. The unprecedented porkathon in Washington this fall reminded the public again of this. Clinton and Gore threatened to shut down the government if the Republicans in ...