(FORTUNE Magazine) – You remember supply-side economics. It brought on those terrible 1980s budget deficits, the ones we'll be paying for well into the next millennium. Or maybe it was the engine behind the longest peacetime expansion in U.S. history, returning pride and prosperity to the land of the free. As Bob Dole likes to say: whatever.

In fact, what happened during the Reagan years had more to do with plain old demand-side economics than the newfangled supply-side sort. So it may be up to Dole, never a supply-side true believer, to give the theory (which, to oversimplify, holds that cutting marginal tax rates and shrinking the government speeds economic growth) its first real tryout. This assumes that he wins the election, is serious about sharp tax and spending cuts, and can persuade Congress to make his promises real. Big assumptions all, but Dole advisers can offer backup for most of them. Stanford economist John Taylor, a key architect of the Dole plan, recited this litany in an interview at the GOP convention in San Diego: "All the calculations are predicated on the basis that you have a president who has a reputation as a deficit hawk, who has the line-item veto, who has a Republican Congress with John Kasich and Pete Domenici as chairmen of the budget committees." That pair, for those who don't watch C-SPAN, are arguably the most committed and successful budget cutters of the modern era.

The Dole plan's 15% income-tax rate cut and halving of the capital-gains tax rate, Taylor explains, should stimulate savings, investment, and productivity. That would create capacity for more supply (of goods, services, and labor), allowing the economy to grow more without overheating. This is the essence of supply-side economics--as differentiated from demand-side theories that call for policymakers to tweak demand by managing the size of the budget deficit or surplus. Reagan's 1981 tax cuts were accompanied by such huge defense and entitlement increases that any supply-side impacts were overwhelmed by the demand surge from unprecedented levels of deficit spending. A tax cut accompanied by spending cuts "would be a much better test" of supply-side theory, says former Federal Reserve Board vice chairman Alan Blinder. But Blinder, a critic of the Dole plan, doesn't expect any growth windfall. "There's a lot more to the growth equation than marginal tax rates," he says.

Taylor and other Dole advisers don't deny this. They say reductions in regulation and litigation envisioned in the Dole plan, along with educational incentives, are essential to their goal of increasing GDP growth from the Clinton years' 2.2% to something closer to 3.5%. But it's a lot simpler to cut tax rates than to untangle regulatory agencies and improve schools, so it's safe to say that at least at first, the Dole plan's impact will be smaller than advertised.

Taylor and company, by the way, don't claim their tax cuts will pay for themselves with increased economic growth--they figure the government will get back a quarter or so of the $548 billion in cuts. Taylor does assume that higher growth caused by Dole's proposals should make it easier to pay for the massive fix Social Security will need early in the next century, which is why he doesn't think his candidate needs to push Social Security cuts now.

That's another big assumption, one of many that must pan out for supply-side tax cuts to succeed. But making assumptions is what economics is all about. That the Dole plan depends on them does not make it the witless remembrance of Reaganism Past that some Democratic critics would have us believe.

--Justin Fox