steaming cup of herbal tea and launches into a detailed explanation of why the

markets and the flagging economy need a dose of tax-slashing economics. "For a

tax cut that would lose no revenue for the Treasury, I'd do three things," he

enthuses. "I'd eliminate the estate tax, take [the] income tax down to 22 percent,

then make dividends deductible at [the] corporate level, which would

essentially get rid of the corporate income tax. With those three reforms, I

would have the economy booming again without a problem. The Jon Corzines could

then spend away to their hearts' content."

It's 7:30 a.m., power-breakfast time at the Grand Hyatt, and

Mr. Gressel is talking up a storm. Sitting across from him is Sally Pipes,

president of the Pacific Research Institute, an obscure San Francisco–based

right-leaning think tank that champions personal freedom, limited government

and other libertarian issues. Ms. Pipes is nodding enthusiastically, following

every word of Mr. Gressel's heartfelt pitch.

But it is Ms. Pipes who is there to make a pitch. She is

hitting Mr. Gressel up for some cash. Not that he seems to mind. He can afford

it-Mr. Gressel runs a large-enough hedge fund out of Greenwich, Conn.-and the

cause, as far as he is concerned, is a fine one. A card-carrying member of the

reenergized Club for Growth, he would be happy to write a check to help turn

back the clock, wipe out Rubinism and put the Corzines on the run.

"So," the 47-year-old Mr. Gressel continues, "the revenue

goes up for the government, output goes up for the country, wages are up for

everyone-why would someone be against that? That's what aggravates me when I

try to explain it."

Mr. Gressel has the rumpled, somewhat frazzled look of the

economics professor he once was (his Ph.D. is from the University of Chicago;

he calls himself a "Chicago boy" with pride). But his mood is buoyant. After

eight years of Clinton-Rubin economics, he has fallen hard for President George

W. Bush and his Reaganesque style and language. Ms. Pipes-who with her large

head of well-tended hair is, appropriately enough, a dead ringer for Margaret

Thatcher-is right there with him.

"I think Bush is better than Reagan," Mr. Gressel says. "He

had eight years watching Reagan work, four years watching Daddy screw up. He

realizes it's more a managerial problem than a let's-get-the-people-behind-me

problem. It's trench warfare now-line by line, fight by fight, my guys against

your guys, tax-eaters against tax-earners."

What a time to be a supply-sider.

As tax-cut fever slowly grips Washington, symptoms of a

similar strain are appearing on Wall Street. Which should not be much of a

surprise: What self-respecting bond-trader wouldn't want to see his marginal

tax rate slip from 39 to 22 percent? Why wouldn't a hard-driving broker scream

loudly for a cut in the capital-gains tax rate?

Strangely enough, though, Wall Street in the 90's had been

decidedly agnostic when it came to supply-side theory. Call it the Bob Rubin

effect: By persuading Bill Clinton in 1992 that the bond market ruled and that,

in a perfect world, budgets would be in surplus and interest rates low, the

deficit-hawk sensibility came to dominate the Street's economic thinking. Cut

taxes and you blow a hole in this hard-won surplus of ours, and back we go to

that dark Reagan age of yawning deficits and punitive interest rates, Mr. Rubin

preached. And how Wall Street listened.

Now, however, with the Clinton boom showing signs of wear,

and with Mr. Bush sounding more and more like Ronald Reagan and less and less

like his father, that good ole-time religion could be coming back into vogue.

Supply-side groups like the Club for Growth are making a comeback. The talk is

about size-not necessity.

Mr. Rubin has foregone

the pulpit for a corner suite in the Citigroup building. Mr. Corzine, his

former ideological partner in  arms at

Goldman, Sachs & Company, is now fighting a losing battle against the

supply-side tide from his perch in the U.S. Senate.

But fighting he is. Booming into the squawk box in his

Senate office, the junior Democratic Senator from New Jersey is getting a bit

worked up.

"To think that we should be moving back to a direction taken

in the early 80's is just absurd," Mr. Corzine says. And he's been telling his

Senate colleagues as much. "They find it catchy when I say, tongue in cheek,

'If I were back on Wall Street as a bond trader in my youth, I would be

shorting the market,'" he adds with a chuckle.

But on the Street, the supply-side message is beginning to

take hold, according to Mr. Gressel and his ilk-and it is their libertarian

prescription, they believe, that will be the cure for what ails the economy and

the markets. Driving much of the discussion is the Club for Growth, a

political-action group that aims to advance supply-side principles by

financially backing like-minded Congressional candidates.

With nearly 3,000 members,

the Club for Growth kicked up something of a storm in 2000 by raising $3

million, backing 16 Republican House candidates and seeing 10 of them win. And

their protégés in the House are a vocal lot of backbenchers, pushing their

colleagues and the administration for deeper cuts in the Bush tax bill, as well

as for the inclusion of a capital-gains tax cut.

Although the club is

headquartered in Washington, its genesis was on Wall Street, where the bulk of

its financial support still originates. The club dates back to 1982, when

Richard Gilder of Gilder, Gagnon, Howe & Company, a small but influential

money-management firm, threw his and his supply-side friends' financial support

behind conservative businessman Lewis Lehrman, who then came close to upsetting

Mario Cuomo in the race for New York Governor. Thus was born the Political Club

for Growth, which was run through 1998 as an informal grouping of Mr. Gilder's

friends and colleagues, most of whom were investors or businessmen (Ron Lauder

is a member; Jets owner Woody Johnson isn't, but he has attended the occasional

meeting). Steve Forbes, Newt Gingrich, Dick Armey, even Bill Clinton in 1991,

amongst many others, would present their supply-side bona fides to club members

in exclusive meetings held in Mr. Gilder's offices.

Even through the Rubin years, the club was there-watching,

waiting. In early 1999, it began to expand, opening up a Washington office,

hiring a political director, Stephen Moore, and renaming itself the Club for

Growth. Since then, growth in membership has been rapid; indeed, the membership

rolls have expanded by 50 percent since George W. Bush eked out his Florida win

and took the oath of office.

"Why the resurgence?" asked Thomas (Dusty) Rhodes, the

club's co-chairman with Mr. Gilder. "Because business is not good. How do we

help business? We increase the after-tax return on investment. How do we do

that? We lower taxes." A former Goldman Sachs partner, Mr. Rhodes, who is now

president of National Review , is

among the club's most vocal and insistent voices. He is perhaps the anti-Rubin.

And don't talk to him

about the danger of deficits, either. "Who says the deficit has to matter?" he

asks. "By closing the deficit, the Clinton administration overtaxed. Where does

it say that the federal government has the right to tax in excess of what it

needs and then to spend that money as it chooses? It's just not right."

Mr. Rhodes' deeply moral view on taxes made him stick out

among his more pragmatic colleagues at Goldman-and in 1992, feeling a bit frustrated,

he cut short his 20-year career on the Street. "Wall Street proper has never

been a great proponent of supply-side economics," says Mr. Rhodes. "What it

tries to do is give balanced contributions to both parties and lobby

accordingly. Wall Street, as well as corporate America, will lobby for what is

[in] its specific interest-a change in the partnership law, this little tax

quirk-as opposed to saying, 'Let's push for a policy that is good for the

country as whole'."

Indeed, a scroll down the club's membership list reveals a

wealth of hedge-fund guys, research pros and private investors, but hardly a

one from the bulge-bracket firms such as Goldman Sachs, Morgan Stanley and

Merrill Lynch. In fact, the names for the most part border on the obscure.

David Malpass, a Bear Stearns economist, is a member. So is Chuck Kadlec of

Seligman Advisors, author of the appropriately optimistic Dow 100,000 . Then there is Bruce Bent of the Reserve Funds, a

family of money-market funds; K. Tucker Andersen of Cumberland Associates;

Alliance Capital Management president Roger Hertog; Charles Brunie, formerly of

Oppenheimer Capital; and, of course, Mr. Gressel of Teleos Asset Management, a

former president of the club. True believers all, they sniff at the ideological

squishiness of their bulge-bracket brethren.

"Wall Street these days is full of Jon Corzines," says Mr.

Gressel. "They still believe in socialism."

No doubt about it, some

ideological gains have been made, thanks in part to the evangelism of the Club

for Growth boys. But that should come as no surprise, given that President Bush

and his tax-cutting plan have been front and center these days. With recession

talk growing and the markets still woozy, what Wall Streeter do you know-save

for Bob Rubin and perhaps Pete Peterson of the Blackstone Group-that is not in

favor of a little tax-cut pick-me-up?

The real question is whether or not the club's increased

visibility portends a return to the days when supply-side thinking was the rule

and not the exception on Wall Street. And if so, what are the implications for

the markets?

"The supply-side movement used to have some real depth to

it," says the Quadrangle Group's Steve Rattner. "But I don't see that same

depth on the Street these days. Yes, people are applauding the tax cuts, but

they are doing so for different reasons than classical supply-side arguments."

They'll do it because they think the tax cuts will stimulate the markets, not

out of a deep-seated belief in the economic philosophy, he believes.

Indeed, even in Washington, the debate is over the size and

scope of the tax cuts, not over the economic philosophy driving it. Which is

what scares the old socialist himself, Senator Corzine, who has been issuing

dire warnings of imminent market doom if too large a tax cut is passed.

Just recently, he

addressed the Senate Democratic Caucus and urged them to take cautionary note

of the recent steepening of the yield curve. (Translation: The curve itself

reflects a pattern of changing interest rates on bonds of differing maturities;

the steepening of it signifies that short-term yields are moving down while

longer-term yields move up.)

"It's a pretty dramatic restructuring of the yield curve,"

Mr. Corzine told The Observer . "And

while this certainly reflects future inflationary expectations [following the

rate cuts], some also has to be related to fiscal policy. People have real

fears that we may be reigniting the policy mix of a previous era, when interest

rates were a lot higher."

He continued on: So what if many of his Democratic

colleagues seem to be sipping the supply-side Kool-Aid? This bond trader would

be a seller. "I don't know where Dusty is coming up with these ideas," said Mr.

Corzine. "If there is anything we have learned, it is that supply-side

economics has grave, grave shortcomings. We have an object lesson of over a

decade of fiscal responsibility, initiated by Bush and continued by Clinton,

that led to lower rates and an investment boom that was healthy for all aspects

of the economy. What we have now is a backward-loaded fiscal plan that could be

extraordinarily destabilizing for the dollar, certainly [for] debt markets and,

in the end, for equity markets as well."

Since late April, Mr. Gilder has been shopping for another apartment on Fifth Avenue with Irene Balsam of Charles H. Greenthal & Company, who confirmed that Mr. Gilder had sold his apartment at 927 Fifth Avenue.

Several brokers said the buyer was investment banker Bruce Wasserstein, who has lived on the 10th floor of 927 Fifth since he bought it for $11.5 million in 1997. They said Mr. Wasserstein could create anapproximately 11,000-square-foot, 25-room duplex with 10 bedrooms and nine baths. Through a press spokesperson, Gene Donati, Mr. Wasserstein would not confirm or deny the deal. Neither Mr. Gilder nor his wife Tess returned a call for comment; nor did 927 Fifth co-op board president Richard Cohen, a real estate developer, and his wife, Fox News Channel anchor Paula Zahn.

Fred Peters, president of Ashforth Warburg Associates, who represented Mr. Gilder when he bought the 11th-floor apartment in 1996 for $10 million, was not aware of the deal. He was sure, however, that Mr. Gilder had done a major renovation. At the time that Mr. Gilder bought the apartment, said Mr. Peters, "the bones … were fabulous, but it needed everything–it had not been updated for decades." Mr. Gilder bought the place from Augusta Berin, widow of clothing designer Harvey Berin, who dressed Pat Nixon. Mr. Peters said the apartments of Mr. Gilder and Mr. Wasserstein would be "complicated to duplex" and that such a project would create "a really big apartment," even for Fifth Avenue.

A lifelong New Yorker, Mr. Gilder helped found the private investmentfirmGilder Gagnon Howe & Company in the late 1960's. In the 70's, he invested with George W. Bush in the Texas Rangers, and in the mid-80's, he founded the Political Club for Growth, a group of supply-side Wall Street Republicans that started to funnel money in a targeted fashion to Washington. A Club for Growth political-actioncommittee was formed two years ago and has used contributions to get elected officials to adopt specific legislation. Mr. Gilder's key issues may ring a bell from President Bush's campaign: Aside from lowering federal income taxes, Mr. Gilder advocates privatizing Social Security and creating more charter schools through a voucher system. Mr. Gilder's end in all this, he has told reporters, is a better environment in which to make investments.

At press time, Mr. Wasserstein–who sold his company, Wasserstein & Perella, to Dresdner Bank for $1.34 billion in stock in April–had not applied to the city's buildings department for a permit to do any construction at 927 Fifth Avenue. As a current resident, Mr. Wasserstein does not have to worry about being turned down by the co-op board of 927 Fifth, as he was by several other co-ops the last time he went apartment-shopping.

But 927 Fifth can be picky. Over the years, the co-op board has rejected Barbra Streisand and Ronald Stanton, the chairman and chief executive of Transammonia Inc., a company that trades and ships chemical products, but it has welcomed Mary Tyler Moore and her husband, cardiologist Robert Levine, and Kenneth Cole and Maria Cuomo Cole. These days, the board is surely more preoccupied with whoever might buy the fourth-and-fifth-floor duplex of ousted Bankers Trust president and chief executive Frank Newman, which is on the market for $19 million.

UPPER EAST SIDE

THE $25 MILLION QUESTION: WHAT'S A CO-OP AT 4 EAST 66TH STREET WORTH? On May 10, a Fifth Avenue co-op popped onto the market and sent the high-end real-estate community into a frenzy. Movie and television producer Leonard Goldberg, who co-produced the Charlie's Angels movie, is selling his seventh-floor apartment at 4 East 66th Street, on the corner of Fifth Avenue, for $25 million, jointly through Edward Lee Cave and Brown Harris Stevens.

Excited brokers explained that not only does the listing represent the first time in five years that an apartment in this building has become available (in 1996, producer Marty Raynes sold the 11th floor to Microsoft co-founder Paul Allen for $14 million), but Mr. and Mrs. Goldberg's apartment is said to be one of the nicest in the building. "People are going to go ballistic," said one source, anticipating the mad rush of brokers trying to show the place.

The price is the hitch. "They just want to see if they can get the $25 million," said one source, who described the figure as irrationally high. Mr. and Mrs. Goldberg bought the 8,000-square-foot apartment for $8.4 million in 1994 to use as a pied-à-terre . "They use it once in a while," said one broker. "They're very social. Wendy [Goldberg] throws benefits there."

"It is the most beautiful apartment I've ever seen, and they could sell it tomorrow for that asking price," said one high-end broker familiar with the apartment. But another broker said that is 2000 reasoning. "There hasn't been a deal that size since the beginning of the year," he said. He also argued that the apartment's renovation may have diminished some of its value. "When [these apartments] have all their original moldings, they can be absolutely amazing, but I understand this one doesn't have all the moldings."

Still, the Goldbergs know that there is a lot of interest in the place. The couple told one source that they get letters and phone calls weekly from people asking if they are planning to sell. The place has 18 rooms, four bedrooms and six baths. More importantly, "it is a major power building," said one source of 4 East 66th Street, where the tenants include Sid and Mercedes Bass and Veronica Hearst.

151 East 83rd Street

One-bed, one-bath, 800-square-foot co-op.

Asking: $395,000. Selling: $401,000.

Charges: $630; 46 percent tax deductible.

Time on the market: one week.

DON'T MESS WITH MOM Yeah, this apartment has a wood-burning fireplace. Sure, it overlooks a lush garden in the back of the building. The prewar details and arched doorways are nice extras, no doubt, but the single mom who bought this one-bedroom apartment between Park and Lexington avenues didn't care too much about the aesthetic perks. This sale was all about location. "She bought it because it is in the P.S. 6 school district, and that is what she wanted," said her broker, Bill Nicolai, vice president of the Halstead Property Company. "That was why she overbid," he added. In fact, this is the fourth apartment in the P.S. 6 school district the mom has tried to buy, only to be outbid on her first three tries. But time was running out; her child is supposed to start school this fall. Determined to get this place, she bid over the asking price (and a little over her ideal price range). She moved in after subdividing the master bedroom and will renovate the kitchen. Broker Dorry Swope, also of Halstead, represented the seller.

WEST VILLAGE

59 West 12th Street

One-bed, one-bath, 900-square-foot condo.

Asking: $1.2 million. Selling: $1.4 million.

Charges: $805. Taxes: $550.

Time on the market: two days.

DESIGNS ON THE NEIGHBOR? Victor Principe of Douglas Elliman was pleasantly surprised that this apartment sold as fast as it did (in just two days) for as much as it did ($200,000 over asking). He thought that asking over $1 million for a one-bedroom apartment that isn't even 1,000 square feet was already kind of sketchy. "It wasn't a big place; the kitchen needed a gut rehab, and the bathrooms needed to be done," said Mr. Principe. "But I priced it like that because I knew it was special." As it turned out, this apartment–which was being sold by the estate of the late clothing designer Zack Carr III, who did a lot of work for Calvin Klein–was special. In spite of the $1.2 million asking price, a bidding war started in the first hour it came on the market. The guy who finally bought the place is a young executive who works for J.P. Morgan Chase. He'd been looking for the perfect apartment for two years, and once he found this one, he wasn't going to let it go. Question: Was it the wood-burning fireplace and the wrap terrace that he was so attracted to, or the fact that Marisa Tomei lives right next door?

BROOKLYN HEIGHTS

114 Pierrepont Street

Three-story, 1,600-square-foot co-op.

Asking: $995,000. Selling: $887,500.

Charges: $1,763; 50 percent tax-deductible.

Time on the market: eight weeks.

EVERY BEDROOM'S A STAGE An investment banker wanted to move his family into a three-bedroom co-op until Laurie Phelan of the Corcoran Group showed him this eccentric property, a small mews building behind a co-op apartment building. The three-story house used to serve as a tiny theater in the early 20th century, back when the apartment building at 114 Pierrepont housed the Brooklyn Women's Club. The club's building was converted to apartments in the 1920's, and the theater building became one apartment of the co-op. The sellers had lived there for a few years, Ms. Phelan said, but were moving to Chicago. According to Ms. Phelan, the building's interior has been completely modernized–"there are no details," she said–but the place is well outfitted with a 650-square-foot roof deck and two wood-burning fireplaces.