Reagan pride in ‘model’

Press, 5 December 1988, Page 18

Reagan pride in ‘model’

NZPA-Reuter Washington President Reagan said he will ride into the sunset next month knowing his administration’s programme of “supply side economics” had become a model for the world. “What we have done in America, the economic model we have created, truly has become what (supply side economist) Jude Wanniski described as 'The Way the World Works’,” said the president, whose term in office ends next month. “Come January, when I saddle up and ride off into the sunset, it will be with the knowledge that we’ve done great things,” he said in remarks prepared for a dinner honouring retiring Republican

Representative Jack Kemp, of New York. Of Kemp, one of the principal architects of supply side theory, Reagan said: "Your ideas helped fuel us to go further into the future than we ever dreamed possible.”

“All the major industrialised nations either have or are in the process of cutting tax rates; privatisation is sweeping the Third World; developing countries no longer look to the state for growth ... (and) even Communist countries are reforming their system to permit more economic freedom.” The theory of supply side economics postulates that by lowering personal taxes individuals will be

encouraged to work harder and consume more, fuelling economic growth. Reagan boasted that his programme of cutting personal tax rates by 30 per cent over a three-year period had led to six years of steady growth in the U.S. economy with low inflation.

Unmentioned, however, was the fact that his administration also piled up huge annual federal budget deficits which peaked at over SUS22O billion (SNZ337B) in the fiscal year 1986, before beginning a slow decline.

President-elect Bush has declared a reduction of the deficit his top priority after he takes office on January 20.