https://pjmedia.com/spengler/2021/11/15/how-to-stop-inflation-a-winning-republican-program-n1532966
Last August I wrote that inflation can crush the Democrats in 2022. After the Republican triumph in Virginia earlier this month, there’s no doubt about it. The 2022 and 2024 elections are the Republicans’ to lose.
Republicans need a clear program to eliminate inflation. Complaining about it won’t help (anyone else old enough to remember Gerry Ford’s “Whip Inflation Now” campaign, or Jimmy Carter’s Moral Equivalent of War, or MEOW?). Inflation is too much money chasing too few goods and services. The Reagan approach was less money (monetary tightening) and more product (tax cuts as an incentive to economic activity). That was designed by the late Nobel Laureate Robert Mundell, the grandfather of supply-side economics.
Establishment Republicans haven’t learned anything in forty years. The Kemp-Roth tax cuts worked wonders because the top federal marginal tax rate stood at 70% when Reagan took office. Now it’s 37%, and cutting from 37% won’t have the same effect. Paul Ryan’s 2017 tax bill cut the headline corporate tax rate but reduced investment incentives, so U.S. corporations spent more money in 2018 buying back their own stock than they did on capital investment. That’s one reason that U.S. supply chains are so creaky today. Trump had the right intentions, but the details fell to Ryan and the tech lobby.
Another part of Reagan’s success was the explosion of digital-age technology, which created new businesses and reduced the cost of computation drastically. I’ve discussed this in a number of lengthier pieces, including this one for American Affairs. That’s because the Defense Department was a driver of innovation rather than a porkbarrel for established defense contractors.
Here’s a six-point program to restore growth without inflation.