Timothy Noah: When Did Trickle-Down Get Respectable?

Timothy Noah is an editor at the New Republic.

Sometime while I wasn't paying attention trickle-down economics got respectable.  

In 1981, when President Ronald Reagan lowered marginal tax rates, his main purpose was to drop the top rate from 70 percent to 50 percent (and subsequently all the way down to 28 percent; the top rate is currently 35 percent). But it was important not to admit as much, because that would be "trickle-down economics." That was the derisive term Democrats attached to Reaganomics. In 1981 the Atlantic published a profile of the White House budget director, David Stockman, in which Stockman said all kinds of impolitic things. About the most impolitic was his admission that the Reagan tax cuts had been "a Trojan horse to bring down the top tax rate." The article's author, William Greider, could barely contain his delight:

"A Trojan horse? This seemed a cynical concession [italics mine] for Stockman to make in private conversation while the Reagan Administration was still selling the supply-side doctrine to Congress. Yet he was conceding what the liberal Keynesian critics had argued from the outset—the supply-side theory was not a new economic theory at all but only new language and argument to conceal a hoary old Republican doctrine [italics mine]....