I'd been having some difficulty understanding the rather nove tax-cutting strategies masquerading as the new conservatism. Funny money schemes have normally been associated with the other end of the political spectrum -- and these new economic nostrums were faintly reminiscent of George McGovern's proposed fiscal sleight-of-hand. There is, after all, something incongrouous in sponsorship by GOP stalwarts of supply-side tax-slashing -- rather like the bishop's joining the chorus line at the burlesque. So I thought I should counsel with America's foremost authority on such fiscal schemes, the intellectual progenitor (whether recognized or not) of much of the new wisdom -- who as a young economist had designed policy for the Truman administration, Leo Hilferding

I had not seen Leo in 20 years. The last time, he had been sitting in a bar in Detroit, whooping it up with a couple of Walter Reuther's boys. His tie (his was the only one in the crowd) was askew, and a week-old copy of the ALF-CIO News was sticking out of his back pocket.

This time it was quite different. Leo was sitting, rather primly, in the Madison Hotel carefully turned out in a well-pressed three-piece suit. A copy of the day's Wall Street Journal lay at his side, opened to the editorial page.

"Leo, you old rascal," I shouted. "How is the famous dispenser of Keynesian remedies?"

Leo looked over his shoulder, somewhat nervously. "Sh . . ." he said, with an air of desperation. "Don't use those old labels." He drew himself up portentously: "I'm a supply-side economist now."

"That's rather drastic shift in your view."

"Not in the fundamentals," he responded. "It's the same old story with the American economy -- excess capacity. We need deficit spending on a massive scale to bring economic expansion - and absorb our underutilized capacity.

"The thing is," he said, "time change. For those who understand the need for deficit spending, supply-side economics is the only show in town. You can't get anywhere these days talking about the marginal propensity to consume. The conversation simply stops. But when we talk about incentives," he added with some reverence, "the sky's the limit for tax-cuting . . . and for massive federal deficits."

He paused for a moment, entranced by the possibilities he was spelling out. "What really matters is the outcome, not the rationale. With Kemp-Roth, and maybe some more defense spending, we should be able to push the deficit over the $100 billion mark. You couldn't do that in the old days. Congress will accept tax-cutting today for supply-side incentives that Sam Rayburn would never have touched."

"Hell," he said (Leo was looking and sounding more like the old Leo. He had loosened his tie and unbuttoned his vest), "we get support we never would have dreamed of in the old days. Evans-Novak are with us all the way on automatic, predisigned tax-cuts, irrespective of the fiscal balance. Remember how Bob Novak used to lambaste us almost daily, saying deficit spending was a Leninist plot to pollute the currency? Now he's switched -- he's our proselytizer. He's joining me in hitting at the old enemies, when he lambastes sterile orthodoxy."

"A man's view of equity, even of fiscal responsibility, changes with his tax bracket," I observed blandly, breaking into his monologue. "Bob's no longer a struggling journalist. Have you looked at his lecture fees?"

"The point is we're finally winning," Leo snapped. "Who would ever have imagined a Republican Treasury secretary referring disdainfully to 'the traditional old-school economics that never worked'?

"Everyone wants to spend these days," he continued. "Another boat, a Mercedes-Benz, a summer place. Now it's the middle class that feels deprived and can push Congress more effectively to run big deficits than the unions could in the '50s. Spending is more fun than fiscal responsibility," he wound up somewhat contemptuously.

"Still," I expostulated, "orthodoxy's not that sterile. How are you going to break expectations regarding inflation when no one saves and the deficit is increasing? What if you fail?"

"No problem," he said with just a touch of the old venom. "Things have not changed that much. We'll attack the Fed and high interest rates, same as always. Central bankers are handy culprits. Paul Volcker and his bunch of killjoys look to be as much our pigeons as McChesney Martin was in the old days."

"For an apostle of Keynesianism, I'd still say this is a pretty dramatic transformation."

"No," he responded, "you've got to go with the flow . . . and today the flow is with supply-side economics. We used to say, 'Demand creates its own supply.' Well, that's still correct. Old J. B. Say had it almost right! It isn't that the supply creates its own demand; it's supply-side incentives that create their own supply . . . without limit."

Leo had rebuttoned his vest and straightened his tie. "It's the best cover for deficit spending that could ever have been devised. Worrying about incentives will carry us a lot further than the old babble about the consumption function."

"Tax relief primarily for the rich -- it's too much," I said. "Don't you worry about the poor anymore?"

Leo appeared shaken. His three-piece suit seemed almost to wrinkle up before my eyes -- particularly the vest.

"You've got me there," he sighed. "I never did like the trickle-down theory."

Then he seemed to brighten up again. "Perhaps we can still introduce the negative income tax for the poor."