Re Scot Lehigh’s Nov. 16 op-ed “Enough supply-side silliness”: Republicans remain attached to supply-side solutions partly because they believe that low taxes and interest rates are sufficient to spur recovery, and partly out of an abhorrence for deficits and distrust of activist government. Democrats believe that low taxes and interest rates are necessary, but not sufficient. That’s why they focus on deficit spending — to put money in the pockets of consumers, or the demand side.
Republicans believe that making more capital available for investment will induce businesses to expand, increasing employment and sparking recovery. However, business people generally want to see recovery on the horizon before they expand.
Yet business must expand in order for the economy to recover. Hence the conundrum and liberals’ insistence that government must intervene to break the vicious circle. Republicans counter that government borrowing to finance debt crowds out private borrowing, and that economies left to themselves will recover more quickly as consumers return to the marketplace to buy needed goods.
That’s the crux of the debate. The question is whether the economy will recover on its own and how long it will take.
High deficits are worrisome, but so is a recession that goes on and on. For those unconvinced by conservatives’ arguments, it’s to be wished that they will drop their reliance on supply-side nostrums, but they don’t show signs of that happening any time soon.