Michael Hirsh has a condescending blog post about Jack Kemp over at Newsweek. Now, I do think Republicans have been insufficiently concerned about debt levels — “deficits don’t matter” — in crafting their fiscal policy. They missed an excellent opportunity to restrain government spending during the 1980s and ’90s, with the baby boomers in their peak earning years and the economy booming. Supply-side economics has been perverted by some Republican pols into a something-for-nothing equation, with Kemp’s own “bleeding-heart conservatism” playing a role.
But let’s look at the other side of the ledger. When a version of the Kemp-Roth tax cut was signed into law by President Reagan, many of the professionals predicted increased inflation. They predicted a worsening of economic conditions. Kemp’s predictions of what would happen in the wake of tax cuts plus tight money were not fully vindicated, but they were much closer to reality than many mainstream economists’. This was the policy mix that put an end to stagflation, an economic phenomenon many of these economists once thought unlikely or even impossible.
Of course, this wasn’t totally a success for “amateurism.” Robert Mundell, one of the economists advising Kemp about this policy mix, eventually won the Nobel Prize. The Tax Reform Act of 1986, which was not totally a supply-side creation, was thoroughly bipartisan. And here’s another bipartisan reality: Nobody, not even Barack Obama, seriously proposes returning to pre-Reagan tax rates today. The deficits of the 1980s and ’90s were reduced without a 50 or 70 percent top marginal income tax rate.
Not bad for an amateur.