Analysis: Roth: Jobs, growth, opportunity

By PETER ROFF, UPI Senior Political Analyst  |  Dec. 16, 2003 at 12:46 PM
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WASHINGTON, Dec. 16 (UPI) -- Sen. William Roth leaves a legacy much larger than news reports suggest.

News of Roth's death Saturday at age 82 was overshadowed by the dramatic capture of former Iraqi dictator Saddam Hussein. But the Delaware Republican who served more than 30 years in the Senate and another four in the House of Representatives, left a heritage important to the U.S. economy, one more important than the eponymous retirement accounts now much in vogue.

As an advocate of the economic theory known as "supply side," Roth was a driving force behind the resurrection of the U.S. economy when the nation's entrepreneurial, commercial and productive capabilities were in dire straits.

If the independent retirement accounts that bear his name -- Roth IRAs -- are his best known contribution to U.S. public policy, a piece of legislation from the early 1980s is his most important.

"He worked to cut wasteful government spending and was one of the first to argue that lower taxes would lead to greater economic growth," President Bush said in a release about Roth's death.

In the late 1970s Roth, working with former U.S. Rep. Jack Kemp, proposed cutting federal tax rates by 30 percent across the board. Their plan, which became known as the Kemp-Roth (or Roth-Kemp) tax cuts, changed the understanding of the relationship that exists between government policy and the economy.

Embraced by Ronald Reagan during his 1980 run for president, Roth-Kemp became the bulwark of a tax-cutting agenda that propelled Reagan into the White House and the GOP into its eventual status as America's governing majority party.

"Bill Roth, together with Jack Kemp and Ronald Reagan, played a centrally important role in bringing forth a revolution with the 1981 tax bill," the Discovery Institute's Richard Rahn said Monday. "Few people realize Roth's critical role in creating millions of new jobs and adding to the well-being of his fellow Americans."

Before Roth-Kemp, the U.S. economy had been crippled by massive inflation, which in turn raised the effective tax rates on most Americans.

Inflation squeezed paychecks, forcing Americans to tighten their belts as the government laid claim to a larger share of their income through what was then called "bracket creep." The cost-of-living wage increases most workers received as a result of the ongoing inflationary spiral pushed them into higher and higher tax brackets -- as though they had experienced an increase in their real income, which, of course, they had not.

The theory underlying Roth-Kemp, as economist Bruce Bartlett has written, was that "workers and entrepreneurs needed to keep more of their earnings in order to stimulate growth, productivity, and investment." This was in sharp contrast to the prevailing view among economists in both political parties that budget deficits were the primary cause of inflation.

Roth and Kemp were right and the proponents of the conventional approach -- including George H.W. Bush who, in his 1980 run for president called it "voodoo economics" -- were wrong. After Roth-Kemp, inflation collapsed, going from double-digits to about 4 percent through out the 1980s while the U.S. economy experienced a period of record economic growth across all sectors, creating 20 million jobs and 7 million small businesses.

None of that might have happened without Roth's initiative. He pushed the plan through the Senate over strong opposition, even from members of his own party.

Kemp, his partner in tax cutting, put it well when he described Roth as "a zealous advocate for taxpayers and a tireless champion of tax rate reductions" throughout his career in Washington.

"Without Bill's support in the Senate," Kemp said Monday, "there would not have been any Kemp-Roth-Reagan tax rate reductions. Bill Roth was a towering figure in American politics but he was an even greater friend."

Roth was born in Great Falls, Mont., and graduated from the University of Oregon. After college he enlisted in the Army. He was awarded the Bronze star for his service during World War II, during which he worked his way form private to captain while assigned to an intelligence unit in the Pacific theater.

He is survived by his wife Jane, a judge on the U.S. Court of Appeals for the Third Circuit; one daughter and one son.

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