The late Jude Wanniski was the most prolific writer and economic thinker that I have ever had the pleasure to know, and he played an important role in my economic education over the course of two decades. He was the one who coined the term "supply-side economics," and he was instrumental, along with Art Laffer, Jack Kemp, and Robert Mundell, in shaping Reagan's economic thinking and the policies which led to The Seven Fat Years (the title of Robert Bartley's excellent book) in the 1980s.
I heartily recommend you read Jude's 1976 essay, "Taxes and a Two-Santa Theory." It's a quick and easy way to understand the tax and spending roles played by our two political parties over the last century. It's easy to forget how each party has evolved over the years. Republicans were not always the party that favored tax cuts, and they have made their share of mistakes, as have the Democrats.
Simply stated, the Two Santa Claus Theory is this: For the U.S. economy to be healthy and growing, there must be a division of labor between Democrats and Republicans; each must be a different kind of Santa Claus.
The Democrats, the party of income redistribution, are best suited for the role of Spending Santa Claus. The Republicans, traditionally the party of income growth, should be the Santa Claus of Tax Reduction. It has been the failure of the GOP to stick to this traditional role that has caused much of the nation’s economic misery. Only the shrewdness of the Democrats, who have kindly agreed to play both Santa Clauses during critical periods, has saved the nation from even greater misery.
On the eve of this year's presidential election, the Democrats are promoting more income redistribution and more spending, while the Republicans are trying to convince the country that tax cuts are what's needed to boost the economy. This time around I think the Republicans are right, but they still have to execute, and their record on that score is spotty.
HT: Russell Redenbaugh