Applying his lessons to politics Professor is architect of Dole tax-cut plan

August 07, 1996|By KNIGHT-RIDDER NEWS SERVICE

STANFORD, CALIF. JTC — STANFORD, Calif. -- As one of the most popular and engaging instructors at Stanford University, economics Professor John Taylor often lectures to as many as 500 students in his introductory economics class.

But lately, he's been sharing his theories and insights in a much more intimate setting: the small circle of economic advisers to likely Republican presidential nominee Bob Dole.

Regarded as one of the country's top economists, Taylor was a major architect of Dole's economic plan that calls for a 15 percent across-the-board tax cut and a reduction in the capital gains tax. He has traveled with Dole in the days leading up to the plan's unveiling, and was the only one of Dole's cadre of six key economics advisers to join him for Monday's announcement.

National economic policy is not foreign to Taylor, who served on President George Bush's Council of Economic Advisers from 1989 to 1991. Colleagues praise him as gifted and deliberative, a mainstream conservative economist who sees tax cuts as a vehicle for economic growth.

"He's one of the most distinguished macroeconomists in the country," said economist John Shoven, Stanford's dean of humanities and sciences. "I'm sure there will be claims that Dole's package is reckless, but I think reckless is the last thing anybody would say about John Taylor."

Said Bruce Bartlett, a senior fellow with the National Center for Policy Analysis in Washington, "If John Taylor says we're going ,, to get higher growth from the Dole tax cut, that's something you can believe."

Bartlett, who is spending August on a visiting fellowship at the Hoover Institution at Stanford, believes strongly in the Dole proposal. But even those who disagree with the Dole plan speak highly of one of the most important minds behind it.

"Normally by the time somebody gets in politics, the academic skills have worn off, and you would not say that about John Taylor," said Rudi Dornbusch, an economics professor at Massachusetts Institute of Technology in Cambridge, Mass. "There's a lot of [economic] cults around and he has stayed in the middle of the road."

In May, Dole commissioned Taylor and five other top economists -- Nobel laureate Gary Becker of the University of Chicago, Robert Barro and Martin Feldstein of Harvard, John Lipsky of Salomon Brothers and Charles Wolf Jr. of Rand Corp. -- to flesh out some economic ideas. Taylor either volunteered or was drafted to write a memo to Dole that outlined the plan announced Monday, said Bartlett.

"From that he just sort of naturally evolved into being the point man for this whole enterprise, and I gather that along the way he earned Dole's trust," Bartlett said. "I guess Dole just likes him."

Nobody is sure if that will lead to a top appointment in a Dole administration, but Taylor could be in line to be the Stanford economics department's third consecutive chairman of the Council of Economic Advisers, following Michael Boskin in the Bush administration and current chairman Joseph Stiglitz.

Taylor, 49, earned his doctorate in economics from Stanford in 1973 and taught at Princeton and Columbia before joining Stanford's highly regarded economics faculty in 1984.

His specialty is macroeconomics, the branch of the field dealing with the broad and general aspects of the economy. He wrote one of the most widely used university macroeconomics

textbooks, as well as devising "The Taylor Rule," which uses various economic data to predict what actions the Federal Reserve Board will take. He also is director of Stanford's Center for Economic Policy Research.

Taylor was an outspoken proponent of Bush's economic platform in 1992, which included a more modest tax cut, and joined other economists in signing public letters backing the North American Free Trade Agreement as well as opposing price controls in the failed Clinton health care proposal.

"This is not a supply-side extremist," said Shoven, the Stanford dean. "He is a mainstream conservative, cautious economist and political adviser."

As a lecturer, Taylor has been ranked as one of Stanford's best by both campus newspapers in recent years. And in 1992, the university awarded him its Hoagland prize of excellence in undergraduate teaching.

"He puts a lot of effort into applications, student exercises, simulating markets. He brings a lot of humor into the classroom as well," said Shoven.

Taylor's colleague in the economics department, Professor Anne Krueger, said he is an all-around economist. "Some people are very good at one thing and not another, but John really has excelled in all dimensions," she said.

Pub Date: 8/07/96

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