WASHINGTON — There’s a presidential election brewing, and like clockwork, a new crop of Republican hopefuls is turning to Arthur Laffer, the father of supply-side economics.
Laffer is a former economic adviser to President Ronald Reagan and famous for the “Laffer Curve,” which, among other things, posits that some tax cuts will produce more tax revenue for the government by stimulating economic activity.
Wisconsin Gov. Scott Walker, widely seen to be gearing up to run for the White House, met with Laffer on Wednesday in New York. Former Texas Gov. Rick Perry, another potential candidate, has talked with Laffer as well. They join a long line of GOP candidates: In 2012, for example, Chas Sisk wrote about how Laffer was being rediscovered by a generation of Republicans including Herman Cain, Michele Bachmann and Newt Gingrich.
Laffer’s core philosophy starts with the idea that lower taxes, lighter regulation and less government regulation are the keys to a strong economy. A generation of Republican candidates have endorsed those ideas. President George W. Bush drew on them for his signature tax cuts. The 2012 GOP nominee, Mitt Romney, ran on a Laffer-style tax reform plan.
Those plans have long come in for criticism from many Democrats and some economists. In a 1999 study, the University of Chicago’s Austan Goolsbee, who would go on to advise President Barack Obama, concluded that cutting marginal tax rates appears to have little effect on how much people work. “As a testable hypothesis,” he wrote, “the Laffer curve has not fared well.”
More recently, Laffer-inspired policies have been on public trial in Kansas, where Republican Gov. Sam Brownback cut income tax rates only to see the state’s budget shortfall balloon. Laffer recently said the policy just needs more time to produce its promised economic acceleration.
Of late, Laffer has also been criticizing currency manipulation among U.S. trading partners and casting doubt on the strength of the American recovery.
You can see those doubts crystallized in a trio of charts Laffer sent me after I interviewed him late in 2013. All of them show the U.S. economy under-performing by historical standards. Laffer is making the case that the Obama economy, compared to the economy under a half-century of presidential predecessors, is underperforming rather dramatically.
Tankersley covers economic policy for The Washington Post.
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