PROVIDENCE -- Though both are after the Republican nomination for the U.S. Senate, incumbent Lincoln D. Chafee and his challenger, Stephen P. Laffey, look at the issues of taxes, federal spending, and the line between "pork-barrel politics" and "delivering for the district," with distinctly differing philosophies.

Through campaign advertising, and in their first debate last week, the candidates have emphasized their differences on economics and tax policy, giving GOP primary voters a clear choice when they go to the polls on Sept. 12.

It's Reaganomics vs. The Concord Coalition.

Like Ronald Reagan, Laffey, the two-term mayor of Cranston, preaches the stimulating effect of tax cuts. It's a belief in the multiplier effect, which says that lower taxes create more investment, more jobs, more payroll and, of course, more profit -- creating a larger pie to tax. That larger pie, even when taxed at a lower rate, brings in more money to the treasury, the theory goes. "The last two years, for example, the receipts to our treasury have grown by 12 and 14 percent," Laffey said.

"John F. Kennedy was one of my heroes," Laffey said in an interview. "He happens to be a Democrat. Today he would be a Republican. He talked about tax cuts, with the multiplier effect. Reagan understood this, the current president understood this. We've created 5 million new jobs since the middle of 2003 when the last tax cuts went into place. Clearly it was necessary to jumpstart the economy."

Laffey has criticized Chafee for opposing tax cuts pushed by President Bush -- "a very, very bad vote by Mr. Chafee," Laffey said. "In fact, a series of them."

"People like myself think money in the hands of individuals would be better spent, and the multiplying effect means that a business owner who has lower taxes will hire some more workers, maybe expand his plant, put an addition on, and then we can tax it overall for more. Many times in the dynamic world, you do take a leap of faith that people will hire people and work harder when taxes are lower. But it's been proven from Kennedy to Reagan."

In opposing tax cuts pushed by President Bush, Chafee predicted the cuts would lead to gigantic budget shortfalls, and he notes that the nation's deficits reached historic proportions during Mr. Bush's time in office. Chafee is a believer in "pay as you go," a philosophy from the 1990s that requires spending cuts or a new source of revenue to balance each tax cut or new spending program.

"To be a politician and not be voting for tax cuts" is difficult, Chafee said in an interview. "On every level politicians want to cut taxes -- that's very popular, but I think I have a responsibility to my children and grandchildren not to leave them with deficits."

Chafee recalls the tax cuts vetoed by President Clinton late in his second term. In his veto message, the president said the nation had worked hard to achieve a surplus and he did not want to go back to deficits.

"Just three or four months later, under President Bush, we were going for tax cuts of $1.5 trillion," Chafee said. "I had my questions. We worked to find the answers -- how were we going to pay for that? And I was saying, 'Supposing we had some real national emergency?' Right away we had 9/11, and all the costs that came from that. We're having deficits again."

Do tax cuts ultimately lead to more revenue? "It hasn't worked that way," Chafee said. "We're still in deficits. The other problem with them is that they do favor the wealthy. I fear creating a greater discrepancy of wealth in this country."

Leonard Lardaro, an economist at the University of Rhode Island, cautions that the economy is a complicated animal and says it's wrong to give too much credit or blame to any economic philosophy. The pay-as-you-go practices of the 1990s were not entirely responsible for the budget surplus President Clinton left behind, nor are tax cuts the sole reason that receipts are up in the U.S. treasury, he argues.

"A lot of the budget strength in the 1990s was from a technological revolution that generated a tremendous amount of wealth," Lardaro said. "One thing to keep in mind is that pay-as-you-go has some real benefits, but don't attribute everything that happened in the 1990s to pay-as-you-go. Think of how well the stock market had done, all the capital-gains money, the economic growth. It made that system look better than it is. I don't think it's a bad system; personally, I think it's a good one, we should be using it now."

As for the effect of the tax cuts, Lardaro said: "People who are preaching tax cuts all the time have convinced themselves that tax cuts more than pay for themselves. To my knowledge there is no empirical evidence whatsoever to support that. Conveniently, the people who say that totally forget about monetary policy and the housing boom, which had a lot to do with the tax revenues and the strength of the economy.

"Let's face it, the housing market carried the U.S. the past few years; that gets left out of the discussion," Lardaro said. "We have a correlation: taxes lower, tax revenue higher. But I think that's really missing the point."

Very low interest rates "had a lot to do to stimulate construction spending, and all those related things that picked up had a lot to do with it. The question is, how much does a tax cut pay for itself? It depends on the particular incident you're looking at and the times and the climate that you're looking at."

Laffey argues that the nation doesn't have a revenue problem -- it has a spending problem. Deficit reduction should begin, he said, with the elimination of pork-barrel spending; with cutting "corporate welfare" that Laffey says totals $150 billion per year, leads to corruption and hurts the U.S. economy; and slowing "out-of-control non-military discretionary spending," he said. He also proposes rewriting and simplifying the tax code.

Chafee says that, while opposing the big tax cuts, he also voted against major spending items, such as the Medicare prescription drug benefit, which he says is too expensive. "I'm a very traditional conservative Republican on taxes and spending," he said.

The candidates have fought relentlessly about government pork -- Laffey's campaign regularly issues statements condemning the "taxpayer rip-off of the week," which is often about federal grant money for a pork project in some far-flung state. He has repeatedly needled Chafee for voting for the $220-million grant to Alaska for the now-famous "bridge to nowhere."

Chafee says the "bridge to nowhere is the whipping boy for appropriations gone out of control." It was contained within a much larger highway bill, which had taken three years to negotiate, he said. That bill also included $20 million for a train station in Warwick, plus language that freed up $40 million in other money to use for a people mover to connect the station to T.F. Green Airport. Voting to kill the bridge, he said, would have jeopardized the whole bill. "I did very well for Rhode Island there."

Chafee said he agrees with Republican Sen. John McCain, of Arizona, that "there should be better discipline" in controlling money for pet projects. He thinks the president should have line-item veto power to strip superfluous projects from bills.

"But the way I look at it, as long as there's an ever-growing pie, I've got to get my share for Rhode Island," he said. "Otherwise those projects are going to go someplace else."

Laffey pledges, "I will not be working at midnight with my staff to stick little things in, the pork-barrel projects that won't be read by U.S. senators. And I won't allow others to do so either. In the end you've got to decide, Rhode Island voters, do they want a better financial future for their children? Or do they want this graft and corruption to continue?

"I'm not against normal appropriations, but when they stick it in at midnight . . . My point is, the normal thing to do is what Linc Chafee's doing -- get the other U.S. senators to give you some pork to show up in different communities in Rhode Island and say, 'Look what I did for you.' That's not what I'm about. He's the normal politician."

marsenau@projo.com / (401) 277-7231