The vast majority of voters have little understanding of economic theory. But, they do understand the difference between a tax increase and a tax cut. As the results of virtually every presidential election since 1980 show, they clearly prefer the latter.

So, despite liberal protests that fill the airwaves condemning supply-side economics, Americans are quite content with the tax cuts attending its application. The current Republican leadership has promoted the magical effects of reduced tax rates with the same effectiveness that P. T. Barnum had in publicizing his circus.

And, echoing the sentiments of Barnum’s competitor David Hannum, the current Republican Party leadership relies upon a sucker being born every minute.

It’s not that there is a fundamental flaw in supply-side economics. To the contrary, there is ample evidence that it is far superior to the discredited demand-side Keynesian economics that only a few sub-room-temperature-IQ liberals still cling to.

Consider what supply-side economics has accomplished since 1980. There is no question that reduction of the maximum marginal tax rate has stimulated private investment by simply getting out of the way of entrepreneurs, i.e., by not taking their capital away. This, of course, enhances accumulation of capital, which our capitalist system thrives upon. President Reagan’s implementation of supply-side economics arguably set in motion two decades of economic expansion. That expansion was slowed by the Bush/Clinton tax hikes in the 1990s. Clearly, George W. Bush’s tax cuts reinvigorated the US economy.

What Republicans have done with supply-side economic policies has been to cut taxes without practicing any semblance of fiscal restraint. And that is a serious problem.

To frame the argument we must review the Laffer curve named after economist Arthur Laffer. The curve shows how tax revenues collected by the government vary with tax rate. As shown, The Laffer curve accounts for the fact that people adjust their behavior in relation to tax rates. Clearly, if the tax rate is 0%, there will be no tax revenues. It is also zero for a 100% tax rate since people are unwilling to work for nothing. As the tax rate increases from 0%, tax revenues increase, and eventually reach a maximum at some optimum tax rate. For the sake of the argument, the figure assumes Andrew Mellon's (Secretary of the Treasury under President Coolidge) value of 25%. Above this rate, people begin sheltering their income from taxation and, at excessively high rates, will eventually evade the tax altogether.

Four presidential administrations have cut taxes and seen tax revenues grow dramatically…

• 1923-1928: Calvin Coolidge
• 1964-1968: John Kennedy (posthumously)
• 1981-1988: Ronald Reagan
• 2001-2008: George W. Bush

By contrast, presidents who have increased taxes have seen total tax revenues drop. Prime examples are the Herbert Hoover and Franklin Roosevelt tax increases at the beginning of the Great Depression that devastated the federal treasury. It’s true at the state level as well. California Governor Pete Wilson’s $7.3 billion tax increase in 1991 caused a reduction of state tax revenues by $2 billion.

Now pause and ask yourself the following question. What should the government do with the increased tax revenues? Before you answer, consider what the four presidents who cut taxes did.

President Coolidge -- the only president to enjoy budget surpluses in every year of his administration -- used the increased revenue to pay some of the National Debt. He was so successful that he paid off a third of the Debt.

President Johnson (who grudgingly agreed to Kennedy's tax cut) -- teaming with a big-spending Democrat Congress -- spent even more than the increased revenue from the tax cuts to pursue a huge increase in entitlement programs (e.g. Medicare) while conducting the Vietnam War. The National Debt increased by leaps and bounds.

President Reagan -- plagued by a big-spending Democrat Congress -- spent even more than the increased revenue from the tax cuts and was stiffled in his attempts to reduce government spending. The National Debt increased by leaps and bounds.

President Bush -- teaming with a big-spending Republican Congress -- implemented his “compassionate conservativism” program and spent even more than the increased revenue from the tax cuts. The National Debt increased by leaps and bounds.

Now, remembering that government grows at the expense of your liberty, answer the question about what the government should do with the increased tax revenues attending tax cuts.