The New Republic

One of the things that has fascinated me about The Wall Street
Journal editorial page is its occasional capacity to rise above the
routine moral callousness of hack conservative punditry and attain
a level of exquisite depravity normally reserved for villains in
James Bond movies. To wit, a recent lead editorial titled "THE
NON-TAXPAYING CLASS." A reader unfamiliar with the Journal's
editorial positions might read this headline and assume it refers
to ultra-wealthy tax dodgers. But no--the Journal, of course,
approves of such behavior. The non-taxpayers it denounces are those
who earn too little to pay income taxes: "[A]lmost 13 percent of
all workers," the editorial fumes, "have no tax liability. ... Who
are these lucky duckies?" In typical Journal fashion, the editorial
is premised upon a giant factual inaccuracy--it completely ignores
sales and excise taxes, which consume a huge share of the working
poor's income. But what makes the editorial truly exceptional is the
reasoning underlying it. The Journal complains that low taxes on
the poor are "undermining the political consensus for cutting taxes
at all." For instance, the editorial considers the example of a
worker who earns $12,000 per year, and, after noting bitterly that
he pays less than 4 percent in income taxes, concludes, "It ain't
peanuts, but not enough to get his or her blood boiling with tax
rage." In other words, the Journal wants to raise taxes on the
working poor so that they will have more "tax rage" and thus vote
for Republicans. Once in office, of course, those Republicans would
proceed to cut taxes for the well- off. (Indeed, according to the
Journal's logic, they couldn't cut taxes on the poor because that
would just lead them to stop voting Republican.) When I try to
visualize the editorial meeting that produced this bit of
diabolical inspiration, I imagine one of the more rational
staffers--maybe Dorothy Rabinowitz--tentatively raising her hand
and asking, "Isn't that idea a bit, you know, immoral?" Then Robert
Bartley or Paul Gigot would emit a deep, sinister laugh and press a
hidden button, depositing the unfortunate staffer into a tank of
piranhas. Come to think of it, I haven't seen Rabinowitz's byline
in a couple of weeks.The Journal is perhaps most famous for helping to transform
supply-side economics from a crank doctrine ridiculed by mainstream
economists and rejected by Washington policymakers into a crank
doctrine ridiculed by mainstream economists yet embraced by
Washington policymakers. But, even though President Bush is no less
committed to supply-side economics than was Ronald Reagan, W.'s
policies, unlike the Gipper's, are almost never described in the
press as "supply-side." A rare exception occurred last month, when
President Bush declared at a press conference that "the deficit
would have been bigger without the tax-relief package." A minor
stir ensued, with Democrats accusing the administration of
practicing supply-side economics and Bush aides denying it.

Why Bush's embrace of voodoo economics became newsworthy just
recently is hard to figure, because his spokespeople have been
saying the same thing for months. "The tax cut gives us a chance
for sustained economic growth. If we have higher taxes on this
economy then the [revenue] projections won't get stronger; they're
more likely to get weaker," insisted White House Budget Director
Mitch Daniels last summer. "The president does believe that cutting
taxes is the best way to spur growth and therefore to have a return
of bigger surpluses," declared Ari Fleischer ten months ago.
Indeed, describing this administration's economic policies merely
as "supply-side" is something of an understatement. Supply-siders
believe that cutting upper-bracket tax rates can cause massive
economic benefits, and in the early '80s they did famously claim
that those benefits would be so large that they would actually cause
tax revenues to increase. But most have spent the intervening years
fervently insisting never to have said any such thing. "[T]he
'supply-side' movement is not remembered for its correct
predictions about prosperity, but for the 'Laffer curve,' and its
supposed prediction that the revenue effects of tax cuts would be
large enough to shrink the deficit," writes Bartley in The Seven
Fat Years, his apologia for Reaganomics. "The prediction, however,
is not one any of us really ever made." So Bush has embraced a
version of supply-side economics so radical that even the
supply-siders themselves have repudiated it. After the president's
controversial pronouncement, no less a purist than Jude Wanniski,
author of the influential 1978 supply-side tract The Way the World
Works, told The Washington Post that the Bush tax cut is "decreasing
revenues."

Wanniski, once a confidant of GOP stars such as Jack Kemp and Steve
Forbes, has since become marginalized by holding forth on
noneconomic subjects--for instance, defending Louis Farrakhan or
insisting that Saddam Hussein did not use poison gas against the
Kurds--where his nuttiness is apparent even to laymen. The other
great tax-cut tome is Wealth and Poverty, written by George Gilder
in 1981. Gilder's reputation, too, has gone south recently. After
winning acclaim as a tax-cut zealot, Gilder abruptly became a
telecommunications autodidact. During the 1990s boom he made a
fortune as a new economy evangelist--he earned up to six figures
for a single speech, and his newsletter, "Gilder Technology
Report," often caused stocks he recommended to jump as much as 50
percent. Gilder used his wealth to purchase the conservative
monthly The American Spectator, which he turned into a monument to
his own genius. One issue featured a 6,600-word cover interview of
Gilder himself, in which he was asked questions such as, "In the
late 1970s and early '80s, you led the intellectual debate on
sexual issues from the conservative side. In the 1980s your book
Wealth and Poverty transformed the way people thought about
capitalism. And then you wandered off to study transistors. Why did
you do that?" (Gilder's reply: "I thought I had won those debates.
Whenever I actively debated anybody, they didn't have any
interesting arguments anymore.") In the same interview Gilder
declared, "Almost all [upper-class women] are averse to science and
technology and baffled by it. And they clutch at the pretentious
irrationality of environmentalism as their countervailing wisdom."
The Spectator promised its readers that "[a]n equally wide-ranging
talk with George will be an annual event." Alas, only one ever took
place. The technology crash caused most of the companies Gilder
extolled in his newsletter to lose virtually all their value. "I
told people in early 2000 they should sell half their shares in
these companies," he told Wired in a semi-contrite interview last
July. "I didn't say it often. I didn't put it in a newsletter."
Gilder had to abandon the Spectator and, according to Wired, is now
broke and has a lien against his home--giving the phrase "Wealth
and Poverty" an unanticipated poignancy. But, as the Journal might
note, his income-tax bill these days is probably almost nil. Lucky
ducky.

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