- The Washington Times - Wednesday, June 14, 2006

There were disturbing signs of further erosion in the conservative Republican base this week when tax-cut crusader Larry Hunter attacked what he called President Bush?s below par economic recovery.

Breaking with his supply-side allies, the veteran free market economic strategist charged in a paper being circulated among conservatives that Mr. Bush?s ?economic recovery ain?t all it?s cracked up to be? and that it is in danger of slipping into a slower growth path.

Mr. Hunter said the party?s conservative leaders can no longer ?ignore the spending cancer growing at the core of the Bush domestic-policy legacy which will lead to tax increases unless it is staunched soon.?

?Conservatives simply no longer can afford to give our support to a political party whose only campaign slogan is ?Vote Republican; we aren?t as bad as the Democrats,? ? he said in a letter to his longtime allies in the war on taxes who were shocked at the intensity of his attack on Mr. Bush.

Mr. Hunter?s gloomy economic forecast was rejected by some of the GOP?s most respected supply-siders who believe Mr. Bush deserves great credit for keeping the economy on a strong growth path with lower tax rates that remain the centerpiece of his domestic agenda. ?This is not a sub par economy, it?s a fantastic economy,? said Art Laffer, the California economic guru widely considered the intellectual leader of Ronald Reagan?s supply-side tax cut revolution that Mr. Bush has embraced and championed throughout his presidency.

In a recent paper on the state of the nation?s economy, Mr. Laffer credited Mr. Bush with cutting the top income tax rate of 39.6 percent under President Clinton to 35 percent and slashing capital gains and stock dividends tax rates that he said were ?the lowest in my lifetime.?

Cesar Conda, one of the GOP?s leading economic policy advisers, expressed sorrow Mr. Hunter had joined a small but growing band of Bush?s critics on the right. ?Larry seems to have forgotten that it was the president who has been pushing through the Congress major supply side tax reduction, cutting marginal rates, and he seems to be belittling that accomplishment,? Mr. Conda told me.

They and other Bush supporters pointed to a robust economic growth rate of 5.3 percent in the first quarter that hardly resembles a below par economy.

Nevertheless, Mr. Hunter?s criticisms are especially stinging because he was a supporter of the Bush tax rate cuts as far as they went, though he sought deeper reductions to fuel stronger economic growth. As a former chief economist at the U.S. Chamber of Commerce who was Jack Kemp?s economic strategist at Empower America, and more recently an analyst at the Free Enterprise Fund, he has been one of the leading supply-side advocates in the tax cut battles of the last several decades.

But in his paper, titled ?Lost Output; Lost Opportunities: Has the Economy Fallen onto a Lower Growth Path?? Mr. Hunter writes that ?by historic standards, the current recovery really hasn?t been up to snuff, and I don?t see much prospect for recouping lost ground without major reforms? in spending and tax rate reductions.

Too much of the Bush tax cuts ?consisted of tax credits and rebates that increased the deficit but did not reduce the marginal tax rate on work, saving and investment. Thus, they did little to boost economic growth,? he said. ?Consequently, the early stages of the economic recovery were sub par when measured against previous recoveries,? he wrote. ?As a result, the economy has not yet returned to the growth path it was on before the recession and in order to do so this late in the day it will have to grow even faster in the coming years.?

He noted, ominously, that both the Bush administration and the latest consensus forecasts by corporate economists ?do not foresee an acceleration in growth occurring.?

Indeed. the administration has conservatively forecast growth next year in the 3.6 percent range, while blue chip forecasters last week saw growth falling below 3 percent.

But Mr. Hunter went far beyond his economic critique to sound a clarion call for conservatives to withhold their support for Republicans to force sweeping reforms.

?I believe it?s time we rejected the GOP establishment?s extortion and fear tactics and laid down a marker of our own to establish the price of our support in the upcoming election. This country isn?t their private plantation,? he said.

At an earlier time, perhaps, Larry Hunter?s sharply-worded criticism of the Bush economy and the GOP would have fallen on deaf ears. But with the stock market in a dangerous tailspin and the polls giving the president failing scores on the economy, his attacks could find a receptive audience among cranky conservatives unhappy with the direction of this presidency and their party?s performance in Congress.

One thing is for sure: With less than five months to go before Election Day, the Republicans cannot afford to lose any more of their political base.

Donald Lambro, chief political correspondent of The Washington Times, is a nationally syndicated columnist.

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