The economy was heading toward a recession, attributable largely to the bursting of the dot-com bubble. From March 2000 to April 2001, the tech-heavy Nasdaq composite average lost about two-thirds of its value. A recession officially began in March 2001. Unemployment rose from 3.9 percent at the end of 2000 to 6.3 percent by the middle of 2003. Without the tax cuts President Bush signed into law, unemployment would have probably gone higher.

The Reagan and Bush tax cuts combined the logic of supply-side economics and of Keynesian stimulus. Supply-siders argue that lower marginal tax rates give people more incentive to work and invest. Keynesians argue that leaving more money in people’s pockets, rather than in government coffers, increases spending and that greater demand for goods and services expands employment. When the government enacts deficit-financed tax cuts, the two channels can work simultaneously.

Yet Mr. Trump faces a vastly different set of circumstances. The economy has not experienced a recent recession. The recovery from the financial crisis and Great Recession of 2008-2009 is now eight years old.

Moreover, there is no sign we are heading into another recession. Over the past year, unemployment has fallen from 5.0 to 4.3 percent, and the stock market is up about 20 percent. Some firms are complaining about labor shortages.

The Federal Reserve is responding to these events by raising interest rates. It believes, correctly in my judgment, that incipient inflation is a greater risk than recession. Keynesian pump-priming is not what the economy needs now.

The main macroeconomic problem the nation faces is slow productivity growth, which in turn leads to slow growth in average incomes. Increased budget deficits would only make this problem worse. They would cause the Fed to raise interest rates even faster than otherwise. Higher interest rates would discourage capital investments, further depressing productivity.

In short, Mr. Trump finds himself not in the position of Ronald Reagan in 1981 or George W. Bush in 2001 but rather of Ronald Reagan in 1986. He should follow the Reagan of the later period and aim for revenue neutrality. He should broaden the tax base, lower rates and reform the tax code to promote saving, investment and growth.