Authors Larry Kudlow and Brian Domitrovic joined SiriusXM host Alex Marlow on Friday’s Breitbart News Daily to talk about their new book, JFK and the Reagan Revolution: A Secret History of American Prosperity.
“John F. Kennedy was really the first supply-sider, post World War II,” said Kudlow. “He was the pioneer in lowering marginal tax rates, which creates more incentives to work and invest and take risks.”
“It was very, very important for Kennedy to do this. The economy was in a slump during the Eisenhower fifties,” he recalled. “Kennedy and his Treasury man, Douglas Dillon, broke out of the slump.”
“The other point that needs to be made in the Kennedy policy mix is he wanted a strong dollar,” Kudlow said, continuing:
He wanted to keep the dollar as good as gold, at $35 an ounce. Now, connect the dots, twenty some-odd years later. Ronald Reagan comes in, the economy is even worse, and he needs an elixir to fix this. And Reagan and his friends and staff said, “Wait a minute. Why don’t we just use the JFK tax rate cuts? Let’s just duplicate it.”
“Kennedy was really the pioneer. Reagan was just duplicating it,” Kudlow said. He elaborated by saying:
Reagan gave Kennedy all kinds of credit, in many, many speeches, which we have in the book. So, you know, guess what, Democrats? Guess what, Hillary? All you want to do is jack up taxes on individuals, and on corporations, and on capital gains, and it ain’t gonna work. You’re not gonna tax your way into prosperity.
He said Democrats have “forgotten JFK’s tax-cutting legacy. In fact, the Democrats have wiped it out of their own history.”
Domitrovic agreed that “none too many” people are aware of how similar JFK’s economic policies were to Reagan’s.
“It’s not only the liberal media; it’s also scholarship that hijacked this history for fifty years,” he said, then added:
Because of the assassination, we got to listen to the professors who advised Kennedy to increase spending and raise taxes, that they got their policy passed in the sixties – in that the tax cut was really some kind of Keynesian thing that would increase demand. Well, that was wrong. Kennedy spurned that advice, and he took the advice of his Republican Treasury – not an academic – Douglas Dillon. But because of the assassination, Kennedy wasn’t around to correct that record, and then the academics, who write all the time, made sure that they laid down their version of events. So it’s really high time to correct that story. That’s what we tried to do in this book.
Kudlow advised listeners to purchase and memorize the book, noting that it was a mere 230 pages long. “It’s all there. It’s good scholarship. It’s good economic points,” he said, recommending it as important policy advice for finally putting an end to the economic doldrums of the Obama years.
“We had this deep recession in 2008, 2009, and so forth. It’s a national meltdown. And Obama comes in, and he tries the exact same failed policy that JFK’s liberal economists tried, i.e., lots and lots of government spending,” Kudlow said. “Remember? Obama’s package was, what, a trillion dollars, slightly less, all government spending. So it didn’t work. It didn’t work, and this turns out to be the worst recovery since World War II.”
Well, Kennedy had something quite similar, as Brian indicates. His liberal advisers – Samuelson and James Tobin and Walter Heller and so forth – they told him to spend, spend, spend in 1961, and it didn’t work. The third of the three Eisenhower recessions spilled over into Kennedy’s first year, and Kennedy knew that if he didn’t grow the economy at five percent a year, that was his target, he wouldn’t be re-elected, because it was a cat’s-whisker victory in the first place.
He explained that Kennedy went in a “different direction” when he saw the liberal plan fail, giving Dillon, a holdover from the Eisenhower administration, and his supporters a chance to get the President’s ear.
“They put a package together, and they said to Kennedy, ‘No, we want a permanent reduction in these outrageously high marginal tax rates.’ Ninety-one percent was the top rate. Can you imagine that?” Kudlow marveled. He said:
Eisenhower, the Republican, never even touched it. They followed through, and even after JFK’s tragic assassination, LBJ piloted through, in 1964, and it boomed. The economy had started booming slowly in ’62 because they had an investment tax credit, which a decent idea. And then it really picked up steam. Everybody was talking about Kennedy’s tax cuts. He gave speeches for the New York Economics Club. He gave speeches to the nation.
He said he loved how Kennedy “basically said, you cut tax rates, the economy will expand, and tax revenues will come flowing in, to pay for itself.”
“Now, that’s Art Laffer, in the mid-to-late seventies!” Kudlow exclaimed, adding:
I actually still believe that. So Kennedy is a very important, pivotal figure not just overall in the country, but for the economic view. Very important. And the fact that Reagan took that bit and ran with it is also extremely important. But my point is that Kennedy, the Democrat, and Reagan, the Republican, used this reduction of marginal tax rates to promote growth. Reagan had a fabulous recovery that stretched into the nineties.
Writing JFK’s tax cuts out of their history allows Democrats to support Hillary Clinton, whose message is, “We’re gonna raise taxes on the so-called rich and rich corporations and capital gains and la de da,” in Kudlow’s rendering.
“She ought to read our book because then she might begin to understand what she’s missing,” he suggested. “Hell, she ought to talk to her husband, who cut the capital gains tax in the mid-nineties, when the Republicans took Congress.”
However, Kudlow mournfully admitted that far from learning JFK’s lessons, the modern Democrat Party would have no room for a man who hailed from the conservative wing of his party, even by the standards of the early sixties.
“Kennedy would be a Republican today. He would be a supply-sider,” he said. “The Democrats have just completely deserted that.”
Domitrovic talked about JFK’s “keen interest in history, particularly the history of the Democratic Party,” which included such figures as party founder John C. Calhoun – Kennedy’s predecessor as the “big tax-cutter” of the Democrat pantheon.
“He really had an eye for the Pulitzer Prize-winning biographer of John C. Calhoun in 1950, and that was a young woman named Margaret Coit, who Kennedy actually dated for several months, before he proposed to Jackie in 1953,” Domitrovic said. “And then for the rest of his life, Kennedy always said that one of his favorite books of all time was Margaret Coit’s John C. Calhoun: American Portrait. And Calhoun was a tax-cutter.”
Kudlow clarified that “the tax rate in the 19th century was the tariff rate because we didn’t have an income tax in those days. We had one briefly through the Civil War, but then it was repealed afterwards.”
“So the Democrats were the tax-cutters. The Republicans were the protectionist tax increasers, through the tariff,” Kudlow said, arguing there was “no reason the Democrats couldn’t go back to their own roots and become tax-cutters again,” other than party politics shifting “so far to the Left that the Democratic Party is now waging class warfare, talking about income inequality and redistribution – but that is not the legacy of their party.”
“If you revive the Kennedy story on lowering tax rates, it might – it might – send some messages and signals to the Democratic Party,” Kudlow hoped. He added:
Reagan could never have passed his tax cuts in 1981 without the help of about 70, 75 conservative, pro-business Democrats in the House. They were called “Boll Weevils” in those days. Reagan reached across the aisle and persuaded them that this would be good for growth. This would be good for their regions. They were mostly Southerners – and they bought it. They bought into it.
“Now, today, you don’t see politicians persuading people on the other side of the aisle. The atmosphere is completely changed; it’s become very poisonous,” he observed. “So Republicans call Democrats names. Democrats call Republicans names. This should change.”
“The country needs a change because the trick here is to revive economic growth. Growth is the essence of the United States, and we’ve been in such a lousy mood – cranky, you know, pessimistic – because we haven’t grown in 15 years plus. We haven’t had wage increases in 15 years plus,” Kudlow contended.
Marlow noted this was not the message sent to American news consumers by media supportive of Barack Obama, much like the way media and academia have suppressed JFK’s history as a tax-cutter to preserve a narrative of Democrats marching eternally to the Left. In both cases, the needs of a political narrative have overruled objective truth.
Kudlow said the truth of the current U.S. economy was “very poor,” calling it a “two-percent economy.”
“Actually less than two percent,” he elaborated. “Really, go back to the year 2000. But under Obama’s so-called recovery, which gets back to the issue of government spending as a failure to promote growth, he’s running two percent. And actually, in the last, oh, four or five quarters, we’re running closer to one percent.”
Also, Kudlow said that “while it’s true the official unemployment rate has dropped under five percent, it’s also true that millions of people have just dropped out of the labor force altogether.”
“That’s a very bad sign,” he warned:
Part of that is just discouragement, part of that is because government welfare payments have grown too large, and it all boils down to the lack of growth. You can’t run a great country’s economy with one to two percent growth. You cannot do it. This country has no tradition like that. We grow the economy at three to four percent, and coming out of the deep recession, we should have gone five, six, seven percent, like we did under Reagan.
He further noted that “profit is falling the last five quarters, business investment has dried up, productivity is falling; this is the heart of the economy. If you don’t have healthy businesses, you’re not going to get good jobs and wages.”
When Marlow noted that “aside from, literally, Donald Trump and the hip-hop community, it seems like no one wants to make money anymore,” Kudlow said he was not completely overcome with pessimism about the culture.
“I think what we’ve done here is, we’ve unwound a lot of incentives to grow. I think that’s really the biggest problem,” he said, adding:
And I think taxes is a good place to start because we’ve been raising taxes. And another place is regulations, which are tax costs by another name. If you’re not growing, you’re not gonna create the jobs you need. That, to me, is the biggest problem, and I don’t know how this is gonna work out.
He described Trump as “an imperfect candidate,” but he praised Trump’s tax cut plan as “very much in the Kennedy-Reagan tradition.”
“If he were to win, and he goes down that road, you’re going to see big, big, big pickup in economic growth,” Kudlow predicted. “But right now, this is a lousy recovery. This is a long-term slowdown in the economy, and it’s got to be fixed. It just simply has to be fixed. Otherwise, America is going to be in deep trouble for the long term.”
“The American people love economic growth. It is in our bones. It always has been,” Domitrovic added. “It’s as central to the American idea as anything. Economic growth is up there with the civil rights revolution, with our constitutional freedoms, with you name it.”
Of his hopes for JFK and the Reagan Revolution, Domitrovic said:
So the story is, we have forsaken the great tradition of economic growth. I think the readership should not only be everyone interested in this election, but even those who are a little bit disaffected by our political scene, who just want simple, old-fashioned great American prosperity that needs to be carried into the 21st century, and to be a beacon for global prosperity and freedom.
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