Extent of Future U.S. Growth Is at Center Of Debate Over Fiscal and Monetary Policy
WASHINGTON -- Has the U.S. entered a new era of high long-term economic growth?</br></br>Given the economy's listless performance in the last half of 1984, that question might well seem irrelevant. But it is at the center of a fiery debate over the course of U.S. economic policy, a debate that is influencing federal budget and monetary decisions.</br></br>On the offense are the "five-percenters" -- a small but well-connected band of economists and politicians. They are convinced the economy has undergone fundamental changes during the Reagan administration and can achieve an extraordinary 5% growth rate over the next five years.</br></br>These optimists are led by Republican Rep. Jack Kemp of New York and a group of supply-side economists who fought vehemently for tax cuts in 1981. They expect those cuts to pay off in sharply improved economic performance. If they are right, tax revenues will be higher than now projected and the budget deficit problem will be less menacing.</br></br>On the defense are the "three-percenters" -- a less cheerful but far more numerous collection of economists. They see little reason to believe economic performance will be radically better than in the past.