LARRY KUDLOW: Happy Birthday Laffer Curve

About 50 years ago, ART LAFFer drew a convex curve on a napkin to clarify the power of tax discounts into two senior officials from the Ford administration named Donald Rumsfeld and Dick Cheney.

Unfortunately, they did not take his advice, and they raised taxes to reduce economic demand, which they mistakenly thought would invade inflation. They were wrong.

The economy went in the deep recession and was not inflation until Ronald Reagan tax discounts and the difficult money of Paul Volker in the early 1980s. But a convex curve showed the perfect policy mix for tax revenues and economic growth.

If tax rates are very high, tax revenues will decrease. But if tax rates are reduced, both economic growth and revenue will rise.

As historical examples, Arthur showed successful tax cuts in Harding-Melon in the twenties of the twentieth century. Then the great JFK tax discounts in the 1960s. Here is what President Kennedy said: “It is a contradictory fact that tax rates are very high and that tax revenues are very low, and the most easy way to raise the long -term returns is to reduce prices now … Reducing taxes now does not bear a budget deficit, but to achieve more economy and increasing that can bring a budget surplus.”

Then the high growth, and low inflation tax discounts that generated an economic boom for about 30 years.
After the LaFFer curve and the tax reduction program in the first period, President Trump Arthur Lafer gave the presidential medal for freedom. Without a doubt, Laffer is also worth the Nobel Prize, but the left economy profession will not give it.

Now, America needs to return the side of the show because many Republicans have forgotten the Laffer curve message. Unfortunately, the JFK Democratic Party is no longer present.

But the pro -growth tax reductions of President Trump with the artificial intelligence revolution will definitely lead to an increase in economic growth from 3 % annually.

Ignoring this, Republicans in congress deprive themselves of about 2.5 trillion dollars of revenues that invade the budget deficit and reduce the debt burden on the economy by bending the debt ratio to GDP.

The Trump Council for Economic Consultants expects more than 4 million new jobs, and more than $ 9,000 a year for the families of the model middle class. So the administration is still going along the Laffer curve.

An interview at Wall Street Journal includes an interview with Lafir, who is quoted by “Big Bill and Beautiful Bill” by President Trump, saying that he would create “economic prosperity as you have not seen.”

Arthur is right. For Capitol Hill Republicans, this should be an educational moment.