More than two years ago, when President Bush announced his aim to start significantly shrinking the budget deficit, many critics guffawed. The called the goal an impossibility, a naïve and futile effort that would be undermined by the fat-cat Republican tax cuts. But now the plan is working. Driven by a surging national economy, tax revenues are increasing and the deficit is rapidly shrinking. Despite the strong and ugly updraft of federal spending, the deficit is on track in the next few years to continue falling until it approaches 2 percent of GDP. This is below the 2.5 percent that has been the national average since 1970, demonstrating that the alarmist critics were simply wrong when they claimed that the tax cuts would lead the country into economic ruin. There is a lesson here, and it is vindicatory of the central claim of supply-side theory: Easing the national tax burden spurs economic growth and expands the revenue base, significantly mitigating the revenue loss that results from tax cuts. The national economy is a dynamic system, and it responds to the incentives and disincentives imposed on it by government policies. So the president has the right idea with his pro-growth policy of tax slashing—now if only he could take that hatchet to the bloated body of federal spending.
From National Review, "The Week..." July 17, 2006