Starving the Government
Jude Wanniski
March 5, 2001


Memo To: A Letter to The New York Times
From: Jude Wanniski
Re: Your Sunday editorial

You are absolutely correct in your argument that the George W. Bush tax plan was at least partly designed to get a chunk of the surplus tax revenues out of Washington. The concern was that they would burn holes in the pockets of the 107th Congress and be spent on pork barrels and new social programs. You are incorrect in your statement, though, that “the more the numbers are examined, the more it is clear that the Bush tax cut seems intended to be an assault on government by starving it of revenues, as Ronald Reagan’s tax cut did in 1981.”

If President Reagan were able to do it himself, he would be writing this letter to dispute your careless attempt to put this blot on his legacy. As one of his earliest supply-side advisors, I can assure you that President Reagan sincerely believed that by emulating John F. Kennedy’s tax cuts of marginal income-tax rates, the economy would grow faster and produce the extra revenues needed to finance any short-term revenue shortfalls that might occur. The proof of that success is not only that revenues did grow steadily thereafter, but also that interest rates on government debt declined even as the debt increased for a variety of reasons unrelated to the lower tax rates.

Your editorialist would have been correct if he had attributed the “starving the government” argument to Mr. Reagan’s budget director, David Stockman, whose primary agenda was to slash what he called “the social pork barrel.” The Republican Party always has had such a faction -- the Old Guard which puts smaller government ahead of non-inflationary economic growth as a political goal. Ronald Reagan broke with that Old Guard, which is why he won election in 1980 and a smashing re-election in 1984. Please refrain in the future from questioning his motives behind the tax cuts when the record is absolutely clear on that point.