The idea was always that the increased revenue raised by economic growth and the closing of loopholes would eventually shrink and then close the deficits. In fact, tax revenue did increase markedly with the expansion, even though the marginal rates where decreased. I am not economist enough to argue all of the details, but Paul Craig Roberts, an economist who worked in the Reagan administration, has argued that had the Congress accepted the gradual cuts the administration proposed, the budget would have been in balance by the end of the administration. As I mentioned in my answer to TigersPaw, part of Reagan's success was in making priorities, and he was more concerned about tax revision, deregulation, strengthening NATO, his military buildup, and other issues than he was in reducing overall expenditures. You see, once converted to supply- side economics, Reagan was not especially a deficit hawk. One of the arguments of the supply- siders was that the threat of deficits had been exaggerated, and used to persuade Republicans into ill- advised "revenue enhancement". Besides, fretfulness over the deficit would eventually infect both parties, and limit spending initiatives, which was all to the good.
As for the Senate being in Republican hands, that was a help, yes, but did not cancel the leverage of House Democrats in the budgetary process.
On the last, thanks, I would rather argue with you than most.....<g> |
