TOP HAT IN THE RING

By Richard Brookhiser

THE FORBES BUILDING IN NEW YORK City is in an odd neighborhood for a corporate headquarters: the fringe of Greenwich Village, set with sedate apartment buildings and churches from the 1840s. It's odd inside too: the ground-floor museum, founded by the late Malcolm Forbes Sr., is stuffed with presidential autographs, czarist Faberge eggs and toy soldiers. From this improbable aerie, Forbes' eldest son Malcolm ("Steve") Forbes Jr., the 48-year-old editor in chief of Forbes magazine, plans to descend into the scrum of Republican presidential politics. He could announce his candidacy as early as this week.

Shy, genial and bespectacled, Forbes looks like an owl surprised at midday. But he feels his strength is as the strength of ten, for his ideas are pure: supply-side Republicanism, from the dawn of the Reagan era. Forbes believes the nation's major problems can be solved simply, with a flat tax allowing few deductions and a stable monetary system tethered to the price of gold. The present tax code, he says, is "a source of political pollution. If you don't clear it out, the weeds will grow back again." And if a new tax system throws revenue projections out of whack, too bad. "If Congress can't get spending under control, why punish the rest of the nation?" he asks. Forbes' second area of concern is education, where he embraces the Republican idea of replacing what he calls the "inbred monopolistic structure" of the public schools with voucher plans. But on other social issues he is laissez-faire--moderately pro-choice, for instance, and against restricting immigration.

Forbes' political experience makes a relative novice like Pat Buchanan look like George Washington. His only turn in public life was as chairman of the board of International Broadcasting for eight years, a position that gave him a little exposure to Washington. His foray into campaign politics so far consists of advising Christine Todd Whitman in her successful run for the New Jersey governorship in 1993. So he takes comfort in the example of Wendell Willkie, the utilities executive and political neophyte who grabbed the G.O.P. nomination in 1940. Forbes is willing to spend $10 million of his own money--an estimated 5% of his fortune--on his outsider's run.

Pushing Forbes into this long-shot investment is a group of supply-side economists desperate to return to their glory days. Their movement first emerged in the '70s, when a handful of conservative thinkers--economists Arthur Laffer and Robert Mundell, along with the editorial-page writers of the Wall Street Journal--gazed on a new idea. If you cut tax rates, the thinking went, people would keep more of their earnings, work harder, and the economy would boom. Since the supply-side message flew in the face of G.O.P. economic orthodoxy, they cried in the wilderness until they were heard by Ronald Reagan, who opened his first term with a three-year cut of income tax rates.

In the G.O.P. of the mid-1990s, supply-side economics has returned to the wilderness. The 104th Congress is dominated by deficit hawks like Ohio Representative John Kasich. Republican presidential front runner Bob Dole is not an ally: supply-siders remember the fight they had with him over a tax increase he pushed 13 years ago. And Dole's challengers on the right are Senator Phil Gramm, who primarily wants to cut spending (not taxes); and Buchanan, who wants to cut immigration, welfare and what he considers the nefarious influence of America's cultural elite. As for California Governor Pete Wilson, he raised his state's taxes $7 billion in 1991.

Dole seemed for a while able to satisfy the presidential longings of some supply-siders. Jack Kemp, who for years was the supply-siders' main standard-bearer, dropped out of the 1996 contest early this year but soon agreed to work for Dole and House Speaker Newt Gingrich as the head of a commission drafting a Republican economic program. Kemp expects to have recommendations by November, and there is little mystery about what they will be: only a reform of tax policies will get the economy moving again, and Dole is the man to do it.

But other believers--most notably Jude Wanniski, editor-at-large of MediaCritic (a Forbes publication)--have lost their faith in the Senator. Wanniski, whose 1978 tract The Way the World Works was a supply-side gospel, had been talking to Dole until the Senator cracked an anti-supply-side jab last March, to the New York Times Magazine, this one about Reagan-era deficits. Wanniski now dismisses Dole, Gramm and Buchanan as "the Protestant wing of the Republican Party," concerned mainly with lecturing people on their behavior.

Forbes tested the waters all summer. American Spectator editor R. Emmett Tyrrell Jr. feted him at a New York dinner for the conservative chattering class, and by the fall he was ready to do battle. So when Dole sent Forbes a fax last week defending his record as a tax reformer, Forbes quickly fired off a counterfax saying Dole had supported 16 tax increases since 1981 and that his letter was "a prime example of why Americans are so cynical about politics today."

In Forbes, supply-siders want the glad, confident morning of Reaganism, forgetting that for all Reagan's good cheer, there were stern notes to his message. He ran against "the evil empire" and opposed abortion. But economic upbeatness was central to his pitch. By making it part of the Republican message now, supply-siders hope to prime the G.O.P. for 1980s-style landslides.