The debate over the economic “stimulus” bill reached silliness pretty quickly and I for one am pleased it went down. To split hairs over relative degrees of Keynesianism is not my idea of enlightened policy discussion. The whole idea was misguided from the outset. The Wall Street Journal sees the “ghost” of Dick Darman’s 1990 budget deal in Treasury Secretary Paul O’Neill’s approach to tax policy and it’s difficult to argue. The Republicans refuse to lead with the growth policies that won them a majority. President Bush could have done worse (and probably did) than appoint Steve Forbes as Secretary of the Treasury or Chairman of the Council of Economic Advisors. He has been preaching growth policies for years as an unabashed supply-sider and has also been warning of deflationary Federal Reserve policy. Others, including George Gilder, have recently picked up the deflationary argument. They make the strong case that productivity growth can be resumed only by urgent action to increase monetary liquidity, cut taxes on new plant and equipment and on investment generally, and reduce the drag of over-regulation, particularly on broadband expansion. One of the real tragedies of the 1990’s is that the Republicans allowed the pro-growth Reagan supply-side success story to be perverted and discredited. I believe that George W. Bush has the pro-growth, supply-side convictions that his father never had. And he has plenty of political capital. He urgently needs to use them both.
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