During the nearly two decades in which battles over economic policy bitterly divided the Republican party, Kansas Sen. Bob Dole had a joke he liked to tell. “The bad news is that a bus went over the cliff,” he would say. “The good news is that it was loaded with supply-side economists.”
Tuesday, Dole climbed aboard the bus.
In a major speech on economic policy in Chicago, Dole set aside his long-held concerns about the deficit and embraced the major tenets of supply-side policy: a “flatter tax system,” abolition of the Internal Revenue Service and a constitutional amendment requiring a super-majority in Congress to raise taxes.
The speech marks a milestone for Dole, for years derided by supply-siders, in a putdown made famous by Rep. Newt Gingrich, as the “tax collector for the welfare state.” But the landmark is equally significant for the Republican Party itself.
After years of debate between advocates of traditional fiscal conservatism, who emphasized the need to cut the deficit even if that meant raising taxes, and supply-siders, who argued that tax cuts would generate enough growth to pay for themselves, the last leading figure of the traditional camp has surrendered.
Dole did fuzz over the terms of his tax proposal and some veteran supply-siders question the sincerity of the old deficit hawk’s conversion to the pro-growth school. Nonetheless, the prolonged debate appears to be over.
“The Republican Party now generally accepts the argument of supply-siders that tax cuts have beneficial effects,” said Jude Wanniski, an economic consultant and one of the earliest and most forceful proponents of the supply-side idea.
Ahead, in the general election campaign of 1996, Republicans face another and in some ways more challenging debate, this time with the Democrats, who will certainly argue that the tax cuts enacted during Ronald Reagan’s presidency came nowhere near paying for themselves and saddled the nation with enormous federal deficits.
Supply-side adherents, exulting in their triumph, attribute much of their political success within the GOP to the fateful decision by the last Republican president, George Bush, to break his celebrated “read-my-lips” pledge not to raise taxes. Bush once famously ridiculed supply-side theory as “voodoo economics” - a phrase he later tried to disavow. It is now an article of faith among Republicans that Bush’s decision to raise taxes eliminated his chances of re-election.