Rich Lowry

In which case, the question is what policy will best create an environment conducive to growth. Clintonites argue that deficit reduction itself stoked growth in the 1990s, by reassuring markets and reducing interest rates. This is a matter of hot dispute, but even former Clinton economist Alan Blinder, a defender of this view, says it worked only in "a particularly fortuitous set of circumstances."

Those circumstances from 1992 -- a market worried about a potentially free-spending liberal in the White House, a deficit that was a relatively high 4.7 percent of GDP -- don't apply today. Bush is trying to boost the economy into higher growth when the deficit is a more manageable 2.8 percent of GDP.

One can disagree about the "fairness" of his tax cuts, but few economists would argue that they hurt the economy, and most would agree that -- all things equal -- they probably help. What alternate policy do Democrats propose to create more growth?

Deficit reduction? According to an analysis of congressional Democrats' budget plans by the anti-deficit Concord Coalition, Democrats simply spend all the money that Bush would devote to tax cuts on programs from Medicare to education.

They would do well to recall another lesson from the 1990s: A growing economy creates more tax revenue, which can, in turn, be devoted to higher spending. In the booming late 1990s, Clinton and Republicans could afford routinely to agree to levels of spending above statutory spending "caps."

So, cut taxes now to grow more later. The deficit? It's big enough to take care of itself.


Rich Lowry

Rich Lowry is author of Legacy: Paying the Price for the Clinton Years .
 
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