Opinion Editorial

Wednesday, November 3, 1999  

Supply-side Economics

Lacking any positive agenda of their own, Democrats lately have been spending most of their time attacking Republicans for their alleged sins of the past. National Security Adviser Sandy Berger recently excoriated Republicans for being "isolationists," a charge that hasn't been true since the 1930s. (Columnist Charles Krauthammer correctly notes that since the Vietnam War, Democrats have had a far stronger claim to being the party of isolation.) Now Vice President Al Gore and First Lady Hillary Clinton have joined-in, attacking "supply-side economics," the theory that underlaid Ronald Reagan's economic policies.

Speaking during his debate with former New Jersey Senator Bill Bradley, Gore mocked Bradley's "big ideas" campaign. "Alchemy was a big idea, but it wasn't a good idea; the 'Contract With America' was a big idea, but it wasn't a good idea; supply-side economics was a big idea, but it wasn't a good one," Mr. Gore said.

Clinton, exploring a Senate race from New York, has also attacked supply-side economics. On October 23, she responded to a speech by her presumptive GOP rival, New York Mayor Rudolph Giuliani, that praised Reagan. Clinton accused the mayor of wanting to go back to the era of "trickle-down, supply-side economics."

It is no coincidence that Gore and Clinton are jointly assailing supply-side economics. They undoubtedly have focus group data showing that the term elicits a negative response, at least among Democrats. (White House adviser Sid Blumenthal probably played a role, having written a diatribe against supply-side economics in the World Policy Journal in 1997.) But if they decide to make it the focus of their general election campaigns, they are on very weak ground. Indeed, Republicans will be able to cite many Democrats in support of supply-side theory.

  • In 1989, after denouncing Reagan's economic program throughout the 1980s, liberal economist Paul Samuelson of the Massachusetts Institute of Technology, a longtime adviser to Democratic presidents, conceded that "the latter half of the 1980s, historians will recognize, has been an economic success story."

  • In 1994, in its annual Economic Report, President Clinton's Council of Economic Advisers made this admission: "It is undeniable that the sharp reduction in taxes in the early 1980s was a strong impetus to economic growth."

  • In 1996, Clinton's chief economic adviser, CEA Chairman Joseph Stiglitz, even justified the administration's own policies as being based on supply-side economics. "Our growth policies are supply-side," he told the New York Times.

There is further evidence as well that supply-side economics is well accepted by the general public, policymakers and professional economists.

  • In 1995, Business Week magazine, which opposed the Reagan tax cut in 1980, said, "the basic supply-side notion has become commonplace: Economic growth depends on how tax rates, regulations, and inflation affect investment, entrepreneurship, and work effort." The same article quoted respected Harvard University economist N. Gregory Mankiw as saying of supply-side economics, "There's no doubt mainstream economic research is more focused on incentives and supply factors."

  • In a 1996 poll, 48 percent of voters said that Reagan's economic policies were good for the country. Only 36 percent said they were not.

  • Earlier this year, Time magazine listed economist Arthur Laffer's formulation of supply-side economics as one of the top 100 scientific accomplishments of the 20th century.

  • Just days ago, supply-side economist Robert Mundell won the Nobel Prize in economics.

    Gore and Mrs. Clinton may win applause from liberal Democrats at primary events when they assail supply-side economics, but if they carry this line of attack into the general election, it is going to fall flat.

    Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, November 3, 1999.

    The National Center for Policy Analysis is a public policy research institute founded in 1983 and internationally known for its studies on public policy issues. The NCPA is headquartered in Dallas, Texas, with an office in Washington, D.C.

    For more information:
    Julie Hillrichs, Dallas, TX 972-386-6272
    Sean Tuffnell, Dallas, TX 972-386-6272
     Joan Kirby, Washington, DC 202-220-3082
     Internet: http://www.ncpa.org

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