Whither supply-side economics? Given debates since 2016 about the meaning of conservatism, those on the right might wish to assess whether and to what extent a philosophy that rose with Ronald Reagan remains relevant nearly half a century later.
The discussion seems particularly timely given that major portions of the 2017 Tax Cuts and Jobs Act will expire next year. The slowly developing debate over the tax bill reveals both the strengths and weaknesses of the supply-side approach: It can yield economic growth — but it gives politicians an excuse not to reduce government spending.
The ‘Laffer Curve’ and the ‘Trump Boom‘
Broadly speaking, supply-siders focus on increasing economic growth by optimizing tax rates. Put another way, rather than following the left’s obsession with the right way to divvy up the economic pie — which presupposes a zero-sum game in which some must lose for others to win — they focus on expanding the size of the pie, such that everyone, both individuals and the federal government, obtain a bigger slice.
The notion that lowering tax rates can yield more tax intake by generating new economic growth came via economist Arthur Laffer and his famous curve. Donald Trump’s 2017 tax package generally followed this blueprint, resulting in significant economic growth and rising incomes — particularly for women, members of ethnic minority groups, and foreign-born workers.
Of course, not all tax reductions result in the same amount of economic growth, nor do they all “pay for themselves” by generating revenue. If
