Tuesday, March 22, 2011

Supply-side conference report.

Today we attended a New York conference on President Reagan’s supply-side economics record sponsored by The Manhattan Institute, The Wall Street Journal, and the Ronald Reagan Presidential Foundation.

The event included an inspiring speech by Steve Forbes, a panel featuring Brian Domitrovic, Jeff Bell and Art Laffer, another panel featuring Larry Kudlow, Lew Lehrman and Larry Lindsey, and a closing discussion between Paul Gigot and Robert Mundell.

It was a tremendous event, and a pleasure to interact with so many supply-side luminaries (a few of whom say they read this blog). The WSJ will post video of the event at some point, which we’ll link to.

Regarding substance, here are a few notes:

  • Lindsey predicted the end of fiat money by the end of the decade. He also observed that congressional Democrats lost the House because they lost seniors. He believes Nancy Pelosi plans to win them back in 2012 by aggressively attacking GOP proposals to cut entitlement costs.
  • Kudlow disputed that the budget deficit represents a “red menace” (Indiana Gov. Mitch Daniels’ description), arguing slow growth was the bigger threat. He noted that one can almost plot the rise of American power in recent decades with gold coming down, and its decline with gold’s rise.
  • Lehrman explained that the U.S. will never get fiscal deficits under control without monetary reform through a convertible dollar, because the world sells us its goods, then uses the dollars to buy up our debt.
  • Laffer was typically optimistic, saying supply-siders are still winning the tax cut argument and that the rate of growth over the next three decades will exceed the 1980s and ‘90s.
  • Prof. Mundell argued the route to stronger U.S. growth is making the Bush tax cuts permanent and cutting the corporate tax rate to 15 percent. Explaining his view that exchange rates – set by the U.S. Treasury not the Federal Reserve – transmit inflation and deflation to the domestic economy, he suggested the biggest threat to recovery isn’t inflation but a significant rise in the dollar against the euro later this year. Such a rise would cut off the already-weak expansion and magnify America’s debt crisis.

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