Newspaper article The Christian Science Monitor

Will Pennsylvania Loss Revive Rockefeller Republicans?

Newspaper article The Christian Science Monitor

Will Pennsylvania Loss Revive Rockefeller Republicans?

Article excerpt

HERBERT STEIN hopes his brand of Republicanism will now come back in favor. It may, he says, with the defeat of former Attorney General Dick Thornburgh in his bid for a Senate seat in Pennsylvania.

Dr. Stein was chairman of the Council of Economic Advisers under President Nixon and considers himself a member of the moderate wing of the Republican Party - that wing of President Eisenhower, former New York Gov. Nelson Rockefeller, Mr. Nixon, and even President Bush "before 1980." That year, of course, was when Mr. Bush joined with Ronald Reagan and the conservative wing of their party to win control of the White House.

Supply-side economists had the ear of the president. They regarded Stein as something of a traitor for his public criticism of the radical tax cuts and other measures of the Reagan administration.

"There are Republicans and then there are Republicans," sighs Stein.

In Pennsylvania, Harris Wofford, a Democrat, won Tuesday after a campaign blaming the Bush administration for the malaise in the economy and calling for national health insurance and an extension of unemployment benefits.

Mr. Wofford's victory will give White House political strategists something to think about. They undoubtedly were delighted that the Federal Reserve Board on Wednesday chose to stimulate the economy further by cutting the discount rate, the interest it charges on loans to commercial banks, from 5 percent to 4.5 percent. And they probably saw the immediate decision of major commercial banks to drop their prime lending rate a half percentage point to 7.5 percent as icing on the cake.

The election result could also fuel the debate within the administration about whether to back a tax cut or not.

Stein, now a fellow at the American Enterprise Institute, holds that a tax cut is a poor idea. Considering the inability of economists to accurately predict the path of the economy, a temporary tax cut could stimulate activity just when a recovery is already taking off. The economic theory calling for using fiscal policy to counter the business cycle has lost a good deal of popularity in the last 30 years, he notes.

Nor does Stein see the slowdown in the United States recovery as sufficiently serious to qualify as an emergency needing fiscal action. …

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