Martin Wolf has a must-read piece on the state of American politics on the Financial Times’ website: He calls the invention of supply-side economics “the most politically brilliant (albeit economically unconvincing) idea in the history of fiscal policy" because it allowed Republicans to promise a “free lunch”—lower taxes, lower deficits, and essentially unchanged spending. The theory was bunk—the federal-debt-to-GDP ratios ballooned under Presidents Reagan, H.W. Bush, and W. Bush—but Wolf says the adoption of supply-side economics as a party platform “transformed Republicans from a minority party into a majority party.
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