Tuesday, February 24, 2009

A Choice, Not An Echo

The Lehmann Letter ®

In 1964 Barry Goldwater, the Republican candidate for president, promised the nation a choice, not an echo. Senator Goldwater pledged not be Democratic-light: A mere echo of the Democratic voice. No, Mr. Goldwater said he would adhere to free-market principles and take the nation in an entirely different direction.

Senator Goldwater lost to Lyndon Johnson. But Ronald Reagan carried the Senator’s free-market principles to victory in 1980. And he gave them special emphasis by adding supply-side economics. Mr. Reagan said he would spur the market forward with tax cuts skewed in favor of upper-income earners. That, Mr. Reagan said, would provide additional incentives for the movers and shakers to work harder while enabling additional saving to spur investment.

Governor Bobby Jindal, Republican of Louisiana, reaffirmed President Reagan’s views this evening. Governor Jindal’s response to President Obama’s address to a joint session of Congress carefully distinguished itself from President Obama’s approach. The president’s plan, Governor Jindal said, relied on more government spending. The governor declared plainly that he preferred cutting taxes.

The president’s approach is standard Keynesian economics: Boost government spending and cut taxes for lower-income earners. That will lift aggregate demand, justifying additional output and income. Governor Jindal’s view is straight supply-side Reaganomics. The distinction could not be clearer. One offers to boost demand; the other says it will grow supply. The governor offered a choice, not an echo.

© 2009 Michael B. Lehmann

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