Jewish World Review Jan. 9, 2001 / 14 Teves, 5761
The Irish economy is booming, thanks mainly to the "supply-side economics'' derided by big government devotees in America and by editorial writers for influential publications such as The Economist and Financial Times.
Irish Finance Minister Charlie McCreevy ignored their advice. He cut taxes by more than $1 billion in this formerly impoverished nation and watched its economy take off. The budget surplus of more than $2 billion and a 9 percent increase in the gross national product has allowed McCreevy to begin paying down government debt. He is also cutting spending in some areas, most notably in Social Community and Family Affairs. That agency's budget was reduced by about $100 million because so many former recipients of government checks now have jobs and no longer need assistance.
An editorial in the Irish Independent newspaper said many of the newly employed hold the "right kind of jobs.'' Forty percent of those jobs pay $25,000 a year or more. That puts additional money into government coffers because more people are working and paying taxes. Businesses can now afford to hire new employees because their taxes have been cut and they have more capital to spend.
Those familiar with the old impoverished Ireland chronicled in Frank McCourt's "Angela's Ashes'' recall a nation in which emigration topped immigration and poverty seemed like a permanent resident. No more. Housing starts are up substantially. Six years ago, the government reported that 6,731 new houses were built. Last year, there were 10,399 housing starts and their cost was about $20,000 greater than in prosperous Northern Ireland.
In the trendy and traffic-free Gafton Street shopping area, post-Christmas consumers were literally wall-to-wall. When fatigue or hunger made them pause, they flooded moderately expensive restaurants. Following dinner, some headed home in expensive cars while others returned for more purchases.
Rosy economic projections of just a year ago have been eclipsed. The workforce is at record high levels. Income tax receipts tripled estimates. The Value Added Tax on goods and services is 5 percent above projections. Perhaps no figure demonstrates the power of the prosperity engine more than the tax on corporate profits, which were up in 1999 by 13 percent over the previous year.
The American economics consultant, Polyconomics, which helped fuel the supply side policies of the Reagan years, thus launching the American economic boom, chose McCreevy as its "Man of the Year.'' It said his tax reforms have single-handedly been the catalyst behind Western Europe's "gigantic shift toward pro-growth reform.''
In view of such a stunning economic expansion, why did a reporter ask President-elect George W. Bush this question last week: "As you prepare your economic plan to submit to Congress, I'm wondering if you could tell us, do you believe, sir, that if you cut taxes, whether it's the marriage penalty or marginal rates, revenues to the federal government necessarily increase, that is to say, you adopt the Reagan philosophy that lower taxes create a revenue source for the government and do not create deficit problems in the future?''
In his answer, Bush said, "I do believe that a properly structured tax relief plan will cause revenues eventually to go up. I believe that a tax relief package, if properly structured, and I'm confident ours is properly structured, will encourage economic growth and vitality and more job creation.''
That is precisely what happened because of the Reagan tax cuts (and those of John F. Kennedy nearly 40 years ago). In the Reagan era, the deficit would never have materialized to the extent it did had the Democrat-controlled Congress reduced spending to give the economy more time to produce the new tax revenues it eventually did.
For those too young too recall the Reagan boom, or who have forgotten, or who believe the fiction
from liberal Democrats and certain editorial writers that government must be fed before people, they
should come to Ireland. Many expatriates are returning home to find their country as beautiful as
ever, but with new economic incentives that make one appreciate the color of money almost as
much as the color of the grass on the lovely