The Shrinking Deficit: Revenge of the Supply-Siders

I got my Bachelor's in Economics; however, like most things you don't use daily (I didn't become an economist), I've long since forgotten a good part of my studies. Some basic principles (and a college infatuation with Ayn Rand) have left me with certain entrenched beliefs. One is in the verity of the Laffer curve, a graphical representation of the idea that, at the margin, tax rates make a tremendous difference.

It's with considerable interest, then, that I greet the news that the deficit is receding, and the debate over the reason. I think the tax cuts have a great deal to do with it; also the spending on the war, and an economy that's in a lot better shape than it's given credit for. None of that is to say that spending doesn't need to be reigned in. Probably the biggest disappointment of the Bush administration is the lack of fiscal discipline. Bigger things have been going on, of course, and on those Bush has been mostly right. Still, given the near impossibility of getting Social Security reform through at this point, Bush should embrace tax reform to ensure his domestic legacy. The tax cuts need to be permanent, and the code simplified, with much greater transparency, lower rates, and far fewer loopholes. The Republicans need something positive to focus on; tax reform, it seems to me, would be a political winner for the 2006 midterms.