Alan Reynolds in National Review, 1978:
Letter to the editor in today’s Wall Street Journal:
While the bill isn’t perfect, it will uncork new business investment and hiring, which will benefit everyone. U.S. businesses are primed for expansion. Since the 2008 financial crisis, we’ve gotten leaner, improved corporate governance, and saved. Companies are sitting on record reserves. It means we’re prepared to put the capital we’ll save from this tax cut to work. This legislation comes at the perfect time. I see companies preparing to hire and expand, my own included. We’ll use our savings to hire and invest in new projects. Roughly 70% will go to my employees, because American companies invest in the future.
Tax cuts, this bill included, aren’t trickle-down but expansion economics. In 1962, President Kennedy argued his tax plan would lift all boats. He knew that if entrepreneurs had the incentive to risk, create and build, everyone would benefit. Growth hit 5.8% in 1964, the year JFK’s last tax cut was signed into law, and 6.5% the next. It’s going to happen again. Just wait.
Falls Church, Va.
Former State Representative Max Abramson wrote a letter to the editor to The Daily News of Newburyport:
To the editor:
Your Dec. 21 edition includes a very misleading opinion piece by Jim Jenkins, who simply reiterates the same talking points that we get from the DNC, Talking Points Memo, HuffPo, and countless leftwing outfits. All claim that Republicans in Congress would cut Social Security and Medicare benefits, even though it was Democrats almost exclusively who’ve voted to cut benefits in 1993 (Clinton tax increases), 2010 (doc fix under Medicare), or raised middle-class tax rates, fees, fines, car registration, etc. in Congress and our state legislatures. Their scare tactics bring back memories of growing up in public housing, being angrily told by Democrat organizers that, if Reagan were re-elected in 1984, we would all be thrown out into the street!
In fact, Congress has cut tax rates 15 times over the last century, bringing billions out of unproductive tax shelters and foreign tax havens, leading to more jobs and revenue growth: four times during the Roaring ’20s under presidents Harding and Coolidge, import taxes in 1933 under FDR, twice during the Truman administration, and Eisenhower’s 1954 middle class tax cut, the largest in American history. The famous JFK tax cuts of 1964 saw an economic boon and more revenue the first year. The larger Reagan tax cuts of 1981 and ’86, as well as 1997 Republican Revolution saw 44 million jobs created and increased federal revenues. So did the 2001-03 Bush tax cuts.
Tax increases during the 1930s, late 1960s, 1990, 1993, and again under Obama in 2010 all drove more money into unproductive tax shelters and overseas accounts, leading to severe recessions and millions of jobs lost, less revenue, and even larger budget deficits.
A 2010 Romer-Romer study performed by President Obama’s own chief economic advisor, published in the American Economic Review, proved that maximum revenues were achieved at 33 percent, but that budget deficits are minimized with a 28 percent rate, suggesting that tax rates should be cut even more than Republicans are proposing. Likewise, countless studies have shown that the 20 highest taxed states – mostly Democrat – have seen no economic growth.
Recent polling of professional economists shows that about 93 percent support free markets, free trade, and reduced government spending and tax rates. Businesses create 1-2 million new jobs each year under business friendly Republican congressional majorities, but are forced to trim 500,000-900,000 workers annually under Democrat majorities. The problem is not just that supply side economics have been proven, but that Democrats refuse to listen, then must raise middle class taxes and cut Social Security and Medicare benefits.
Former New Hampshire state representative
☕ Ralph Benko’s latest for Forbes.com addresses the chaos in the West Wing and how that relates to (or not) economic growth:
But only Trump has the power to really work this out, by directing his advisors — all of them — to start focusing on the right question. How to engineer a 3% – 4% economic growth rate? Getting there is not a mulligan.
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The clashing of White House camps is an inevitable artifact of sluggish growth. All President Trump needs to do to bring about a just and lasting West Wing peace is to focus his team better. The way of producing harmony in the West Wing — and popularity in the polls — is for the President to issue a sticky note to each of his economic and political advisors that says, simply “How do we get real economic growth up from 2% to 3% or 4%, and fast?” Trump, alone, has the power to do this.
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Getting growth is an empirical, not an ideological, thing.
Worked for JFK. Worked for Reagan. Worked for Clinton.
Would work for Trump.
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Reagan supported Chairman Volcker’s wringing inflation from the economy. When that was accomplished, and Reagan’s across-the board tax rate cut was fully phased in, America enjoyed a cumulative 3.5+% economic growth rate with a spectacular 7% year. Mr. President? That was huge.
☕ Dan Mitchell also has a new post that while not strictly economic, does matter in the economic realm. As we know, money taxed away from the people is money taken out of the consumer economy.
☕ If you can get to Dallas on May 9th…
☕ Larry Kudlow appears in the New York Sun with this piece:
In recent years, this static modelling has led to the notion that tax cuts need a “pay-for.” If you don’t cut the budget enough, you don’t get your tax cut.
Almost weirdly, the scorekeepers are happy with tax hikes, allegedly to balance the budget. But tax hikes depress economic growth, which reduces GDP. And with a smaller income base, actual revenues decline, simply because most everybody is worse off.
In truth, the best way to balance the budget is to reduce tax rates and provide new incentives for faster growth, which then expands the income base and throws off more revenues.
Brian Domitrovic and I, in “JFK and the Reagan Revolution,” quote President Kennedy’s 1962 speech to the New York Economics Club. With high drama, the Democrat turned against the New Deal, saying, “it is a paradoxical truth that tax rates are too high today [91% top rate] and tax revenues too low, and the soundest way to raise revenues in the long run is to cut rates now. . . . The reason is that only full employment can balance the budget, and tax reduction can pave the way to that employment.”
Twenty years later, Republican Ronald Reagan duplicated the JFK tax cuts to liberate a stagflationary economy. Today, the JFK-Reagan approach would rescue a stagnant economy. But the scorekeepers stand in the way. They’re part of the swamp. They’re telling President Trump that one cannot lower tax rates without pay-fors.
Larry Kudlow, staying on message masterfully, writes about the JFK-Reagan policies that ushered in real growth:
But the bigger theme is the need for the U.S. and the world to return to the free-market, free-trade, entrepreneurial, supply-side, tax-incentive model of growth with stable money. That model worked during the Coolidge-Mellon 1920s, the JFK 1960s, the Reagan 1980s, and the Clinton 1990s.
If nothing else, a new Republican Congress must message clearly that the U.S. will stop the recent leftward economic lurch. It’s not hard to pinpoint what’s gone wrong, propose positive solutions, and argue that the economic ship can be righted fast.
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So let me optimistically argue that the slow-growth economy can be rescued and the fiscal and monetary mistakes can be reversed. Lower tax rates, less spending, deregulation, and a sound dollar will do it. The GOP can make this case — and right away.
And if the Sandinista Democrats would read a little history, they’d see I’m arguing for the JFK model of growth — which was the forebear of Ronald Reagan’s supply-side revolution.
It can be done.
Also, Larry Kudlow interviewed Jeff Bell this morning on his national radio show. Listen to the interview here:
By Larry Kudlow and Brian Domitrovic
Hurrah for the 50th anniversary of the tax cut championed by JFK, signed by LBJ, to spur growth.
At the end of the article….
Mr. Kudlow is host of CNBC’s “Kudlow Report.” Mr. Domitrovic is chairman of the history department at Sam Houston State University. They are writing a book on the JFK tax cuts, to be published by Penguin next year.