Mr. Reagan on His Record ...
SN HIS ROUSING speech accepting the nomination, President Reagan kept coming back to a particular contrast. Four years ago, he said, inflation was high and unemployment was rising. This summer, inflation is much lower and the number of jobs is rising. The convention cheered wildly. Mr. Reagan is making the economy the pivot of his campaign, and so today, instead of rehashing the . whole Great Glitz of Dallas, we will concentrate on this one pointÛÓon his main claims. Let us leave aside for the moment Grenada, the Olympics, the repair of the Statue of Liberty, which party FDR belonged to, which party God belongs to and who thought of women first. For voters, as they contemplate the next four years, there are two central economic questions here.</br></br>The first is how long the present surge of growth will continue. Perhaps Mr. Reagan really has found a way to break through the old limits, as he argues, and set the American economy on a wholly new course. And then again, perhaps he has merely had the good luck to run for reelection in that halcyon few months between the point at which a big deficit begins to generate jobs and the less welcome point at which you begin to see the familiar effect on the inflation rate.</br></br>The second question is whether the Reagan method strikes you as fair. His tax cuts mainly helped the people with the most money. His budget cuts mainly hurt the people with the least. For the past generation there has been a fairly durable balance among economic classes in this country. Mr. Reagan has tipped it in favor of the wealthy. The distance between the top and the bottom of the income scale is now widening for the first time since the 1920s.</br></br>The real magic in the original Reagan program was supposed to be the special design of the tax cuts. They were to provide powerful incentives for saving, investment and production. That was the supply-side formula for years of rapid economic growth without inflation. If the poor lost some of their government benefits, that was no matter; they would shortly be caught up in the rising stream of prosperity.</br></br>Some Republicans argue with bitter conviction that it all will still work. Maybe so. But you have to say that there's no sign of it so far. Nothing has happened in the past four years that cannot be fully explained by the old economicsÛÓconventional, familiar and boring as it is. A long and harsh recession early in the Reagan administration brought down the inflation rate. Then a very large and growing budget deficit produced a strong recovery. ThereÛªs nothing supply-side about that. ItÛªs pure Keynesian demand management, on a scale that no previous president ever dared. As for business investment, savings and consumption, they are all just about where they were four years ago.