The death of Ronald Reagan wasn't just an occasion for his admirers to reminisce about his life and accomplishments. It was also an occasion for his detractors to try to tear him down. In many cases, they have been aided and abetted by reporters who failed to do their homework and repeated old myths about Reagan's economic program that are demonstrably untrue.
 
One of these myths is that Reagan sold the country a bill of goods with his 1981 tax cut, promising that it would lose no revenue. Business Week, among others, repeated this myth in its June 21 issue. "Reagan and his supply-side advisers," it said, "believed that big tax cuts would pay for themselves by generating higher tax revenues through greater economic growth."

 This is simply nonsense. No one in a position of authority in the Reagan administration ever said that the tax cut would pay for itself. The proposal that the White House sent to Capitol Hill on Feb. 18, 1981, clearly shows that it expected revenues to decline significantly.

 The document estimated that the 1981 tax cut would reduce federal revenues cumulatively by $657 billion by 1986. No feedback effects whatsoever are estimated. Revenue as a share of the gross national product is shown to decline from 24.1 percent in 1986 without the tax cut to 19.6 percent with the tax cut.

 Furthermore, the White House's estimate of federal revenue following enactment of the tax cut exactly tracked that of the Congressional Budget Office, which was then under Democratic control. In a March 1981 report, "Economic Policy and the Outlook for the Economy," the CBO estimated the effect of the tax cut on revenue. On page 47, one can see that they are almost identical. Following are the figures.

 Revenue in billions of dollars
 Fiscal Year ---- White House ----CBO
 1981 ---- 600 ---- 599
 1982 ---- 650 ---- 654
 1983 ---- 709 ---- 707
 1984 ---- 771 ---- 769

 The point is that whatever errors were made in estimating revenues, they were not based on the Laffer Curve or anything to do with supply-side economics. As it turned out, everyone was wrong about the forecast for federal revenues. They came in much lower than expected by the CBO and all private forecasters. This was not the fault of some trick played by Reagan, but a widespread error in predicting key economic variables.

 This brings me to a second myth that has lately been revived -- that Reagan grossly overestimated how well the economy would do after the tax cut. As The New York Times put it on June 10, "The budgets prepared by David A. Stockman, Reagan's first budget director, adopted what was called a 'rosy scenario' -- impossibly optimistic predictions about future growth, inflation and interest rates."

 Again, a simple check of the record will show that this was just not the case. A review of contemporary economic forecasts by the Carter administration, Reagan administration and CBO shows that the Reagan forecast was not out of line and was actually closer to the mark than the others.

 Looking at real GNP growth, Reagan forecast an average rate of 3.9 percent between 1981 and 1986. Carter forecast 3.3 percent, and the CBO predicted 2.9 percent. It turned out that Carter was exactly on the mark at 3.3 percent, but the Reagan forecast is clearly not outside the normal error range. It was too high, but the CBO was too low. Continued...