« The Heads Blog 2008 | The RCP Blog Home Page | Bad News for Romney »

Who Will Be the GOP Supply-Side Candidate?

The early (but much accelerated) race for president on the Republican side has coalesced around the "Big Three" of Senator John McCain, former New York Mayor Rudy Giuliani and former Massachusetts Governor Mitt Romney. Messrs. McCain and Giuliani have commanding leads in the early polls: The latest RealClearPolitics Average gives Mr. Giuliani a small five-point lead over Mr. McCain nationally, 31.4% to 26.4%.

Mr. Romney trails the other two substantially, logging in at only 6.4%. But with George Allen's surprise loss to Senator Jim Webb in November, Mr. Romney is thought to be the most likely candidate to emerge as the conservative option for Republican voters not enthused about either Mr. Giuliani or Mr. McCain.

Mr. Romney recently appeared to be reaching out to social conservatives with his high-profile fight against gay marriage in Massachusetts. However, a very damaging YouTube video of his 1994 debate with Senator Ted Kennedy opened him up to charges that his recent focus on social issues was little more than presidential political opportunism. With his campaign noticeably stalled in the last few months, Mr. Romney turned attention to the economy with a high-profile speech yesterday to the Detroit Economic Club, in which he promoted his vision of a tax-cutting administration that reduces entitlements, promotes free trade and lessens business regulation.

In a post-speech interview on CNBC with Larry Kudlow, Mr. Romney strongly played up his supply-side beliefs: "Raising taxes well above 18% of GDP would cause a slowdown of the growth in the economy, would reduce our employment and would reduce the wages and salaries of people in this country. It is a bad idea. Ronald Reagan, and before him John F. Kennedy, proved that by keeping tax rates low you create more jobs and innovation in this country."

Unlike 28 years ago when George H.W. Bush dismissed Reaganomics as "voodoo economics," supply-side economics is a well-accepted view in the Republican Party today and it is doubtful that either Mr. McCain or Mr. Giuliani would disagree with any of the Governor's broad points.

While Iraq has dominated the political oxygen for the last six months, as the 2008 Presidential campaign heats up there is likely to be a battle among the "Big Three" of Messrs. Giuliani, McCain and Romney to lay claim as the pro-growth, supply-side candidate in the GOP field. With the rapidly shrinking deficit and booming U.S. economy providing validation for the Bush tax cuts, this competition among the leading GOP contenders may lead the eventual Republican nominee to get behind a solid and perhaps bold supply side, pro-growth agenda -- including radical tax simplification, a flat tax and private retirement accounts.

At the same time, the Democratic Party will likely be turning away from the Clinton/Rubin economic approach of the 1990's to a more Jim Webb/John Edwards style populist, anti-trade, progressive approach to the economy. Though Iraq gets most of the airtime, the 2008 race could be a crucial turning point for the future of economic policy.