People who believed in the Bush boom and got into the markets when the president cut tax rates in 2003 have done very well. If you read NRO and have bought into the ideas of Larry Kudlow, Art Laffer, Steve Forbes, Rich Karlgaard, Brian Wesbury, Don Luskin, and yours truly, you made money. If you bought into the leftie doom-and-gloom scenario of Paul Krugman et al, you missed one of the great wealth-creation events in modern history. Bush proved, once again, that Reaganomics isn’t just theory — it really works. It works when Republicans like Calvin Coolidge use it. It works when Democrats like JFK and Bill Clinton use it. It even works when Russia and China use it.

But it doesn’t work when it’s not used, and that’s what’s happening to investors right now.

There’s been a great deal of discussion about whether or not the Bush tax cuts are going to expire at the end of 2010. But almost nobody has mentioned the fact that some of them have already begun to expire. The tax cut of 2003 extended a provision which changed the law (for fellow code-heads like myself, I’m talking about section 179) so that businesses could deduct durable-equipment expenses more quickly than had been allowed previously. Instead of forcing businesses to spread the tax deductions out over five or seven years, they were given greater leeway to deduct the purchases at the time they were made. That provision expired three weeks ago. No wonder investors are apprehensive about a slowing economy.

It’s not just the business-equipment deduction; it’s also the whole cluster of issues that buzz around the presidential election. Every caucus and primary election is a leading indicator of future tax and regulatory policy. Investors are just registering what they see. And they see that since Iowa, the pro-growth party has been in disarray while the anti-growth party has been the beneficiary.

If you don’t believe me, just look at the Intrade political-futures market for a Republican win overlaid with the Dow Jones Industrial Average. As the GOP prospects fall, so do the prospects of the investor class. Either a pro-growth candidate becomes a front-runner, or a front-runner becomes (persuasively) pro-growth. Otherwise investors will remain jittery. Do you blame them?

This article was originally published on National Review.