So folks, Kevin McCarthy has journeyed to the White House to sit down with President Biden in order to fix our spending and borrowing problem. Right? Today, Federal Reserve Chair Jay Powell announced more interest rate hikes and monetary tightening in order to fix our inflation problem. Right?
What do these three have in common? They’re from the government. I once worked for a guy many years ago who had this to say about the government at a press conference in 1986:
RONALD REAGAN: “The nine most terrifying words in the English language are ‘I’m from the government and I’m here to help.”
But that’s not all. In his first inaugural speech in 1981, the Gipper said, and here it is, take a listen:
RONALD REAGAN: “Government is not the solution to our problem. Government is the problem.”
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So, I sincerely hope that at least House Speaker Kevin McCarthy will have something interesting to say when he gets out of his meeting with President Biden about solving massive federal spending and, for that matter, I hope President Biden might have some kind of epiphany and he’ll have something good to say, but for decades now, government has been on a tear, spending and borrowing and regulating and sometimes taxing all of which has stifled economic growth and killed prosperity.
As for the Fed, it’s basically the same story. Stop and go. Go and stop. There is no inflation. It’s all transitory. Oops! Now we’re going to have to clamp down and act like Paul Volcker and in the process probably slaughter the economy. Just as an aside on the Fed: they’re targeting unemployment, which is something they shouldn’t do.
What they ought to be targeting is commodity indices, gold, even the M2 money supply, per Milton Friedman. If they’d done that, we wouldn’t be in the fix we’re in right now, with the economy rapidly losing altitude and heading into recession, but tonight we have a happier task, talking to my great friend and mentor Art Laffer, who has a new book out called “Taxes Have Consequences: An Income Tax History of the United States.”
Art shows, with clear prose and abundant factoids, that the Harding-Coolidge-Mellon tax cuts of the 1920s launched a boom, the Hoover-FDR tax hikes of the 1930’s launched a bust, the JFK tax cuts of the 1960’s launched another boom, the LBJ-Nixon tax hikes launched a bust in the 70’s… then came the Reagan tax cuts, which launched the great boom of 1982 to 2000 and then finally the Trump tax cuts, which at least gave us a brief but illuminating prosperity episode.
One of the wonders of lowering marginal tax rates is it gives power to individual men and women. It takes power away from government. There’s a lesson there, folks, a very important lesson. Lower tax rates reward success, encourage entrepreneurs, rejuvenate the dignity of work, and make tax-avoidance shelters unnecessary.
The Laffer curve teaches us that lower tax rates wind up increasing tax revenues. Tax something more, you get less of it, Mr. Biden. Tax something less, you get more of it: more jobs, more income, more investment, more free enterprise, more freedom. History shows this with great clarity and that’s why Art’s new book is so important.
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When you cut taxes, you give power and freedom to individual men and women and you take power away from the heavy-handed bureaucrats in the government.
I know the White House meeting with Biden and McCarthy is important. I know the Fed meeting with Jay Powell is important, but right now I’m going to have a conversation with Art Laffer and Steve Moore, which is much more important. Save America. Restore prosperity. Cut taxes.
Read More: LARRY KUDLOW: Restore prosperity, cut taxes