show that tax cuts would actually increase tax collections. This meant that government could spend generously in an effort to curb unemployment, without requiring the burdensome taxes to pay for it. That was the first selling point. The second selling point was Mundell's. Most economists believe that government spending and interest rates can only be used together, in tandem, to slay either one dragon or the other. But Mundell argued that they could be split up: government could spend generously to fight unemployment, and raise interest rates to fight inflation. This was the perfect strategy for Reagan. He could cut taxes on the wealthy while spending money to keep the masses happy and everything would run smoothly. Hedrick Smith writes:"...Mundell's argument was music to Reagan. A few advisors warned him that Mundell's approach would not work, could not work -- indeed, Reagan's own experience would prove that in 1982-83. But Reagan bought Mundell's theory anyway, for it told Reagan what he wanted to believe: that you could cut taxes, cut inflation, have economic growth, and balance the budget all at the same time." The man charged to make this all work was David Stockman, Reagan's budget director who would later come to ridicule the ideas he once espoused. Stockman's genius and mastery of numbers was matched only by his relatively young age, which earned him the title of "whiz kid." Stockman, Roberts and Anderson came up with a massively optimistic forecast for the economy, which today Stockman derisively refers to as the "Rosy Scenario." The Rosy Scenario predicted that the 1981 tax cuts would produce 5 percent growth in 1982. This proved to be horribly untrue as the economy actually shrank accounting for inflationary factors. Many budget-watchers pointed out that the tax cuts would only increase the deficit, but Stockman silenced all his critics with a blizzard of statistics and information."Like a child prodigy chess champio...
