JFK v Reagan/Demand-side v Supply-side

[Procrustes Stretched]

JFK v Reagan/Demand-side v Supply-side

I often see right wing nitwits using the tax cut policies of JFK and see them equating them with the Tax policies of Reagan. I see many younger people being puzzled by this. As usual, the right is only using a bit of truth wrapped in horseshit.

JFK, the demand-side tax cutter. - By David Greenberg - Slate Magazine

So, was Kennedy really a forerunner to Reagan and Bush? Or are supply-siders just cynically appropriating his aura? The Republicans are right, up to a point. Kennedy did push tax cuts, and his plan, which passed in February 1964, three months after his death, did help spur economic growth. But they're wrong to see the tax reduction as a supply-side cut, like Reagan's and Bush's; it was a demand-side cut. "The Revenue Act of 1964 was aimed at the demand, rather than the supply, side of the economy," said Arthur Okun, one of Kennedy's economic advisers.

This distinction, taught in Economics 101, seldom makes it into the Washington sound-bite wars. A demand-side cut rests on the Keynesian theory that public consumption spurs economic activity. Government puts money in people's hands, as a temporary measure, so that they'll spend it. A supply-side cut sees business investment as the key to growth. Government gives money to businesses and wealthy individuals to invest, ultimately benefiting all Americans. Back in the early 1960s, tax cutting was as contentious as it is today, but it was liberal demand-siders who were calling for the cuts and generating the controversy.

 

[Oddball]

You'd be our resident expert at about wrapping a few scraps of truth around heaps of bullshit.

 

[Procrustes Stretched]

You'd be our resident expert at about wrapping a few scraps of truth around heaps of bullshit.

you're on a roll.

 

[CrusaderFrank]

I read the article and ...what the fuck are they talking about? How is it a "demand side" tax cut? Because they say so?

Progressives need to go extinct, the sooner the better

 

[Revere]

There was nothing Keynesian about Kennedy's tax cuts.

 

[Trajan]

You'd be our resident expert at about wrapping a few scraps of truth around heaps of bullshit.

slate mag. the place one goes for information.....get one at your newsstand now..oh wait.

 

[Procrustes Stretched]

There was nothing Keynesian about Kennedy's tax cuts.

if you say so

 

[Procrustes Stretched]

You'd be our resident expert at about wrapping a few scraps of truth around heaps of bullshit.

slate mag. the place one goes for information.....get one at your newsstand now..oh wait.

The notion of Kennedy as supply-side forerunner is a powerful myth, but it is a myth. Context is key. Conservatives love to quote a speech Kennedy gave at the Economic Club of New York in December 1962. Here's one quote—I've italicized the crucial part often left out: "Our present tax system, developed as it was, in good part, during World War II to restrain growth, exerts too heavy a drag on growth in peace time; that it siphons out of the private economy too large a share of personal and business purchasing power; that it reduces the financial incentives for personal effort, investment, and risk-taking." JFK was not expounding an implacable economic philosophy; he was speaking about a very specific circumstance. The top marginal tax rate was 91 percent, which JFK wanted reduced to a "more sensible" 65 percent. Compare that with today's 35 percent top rate, and ask: If supply-siders are so enamored of JFK's tax policies, would they advocate a return to a "more sensible" 65 percent top rate? Applying Kennedy's tax talk to the current structure, JFK biographer Robert Dallek says, is like comparing "apples and watermelons."

[See editorial cartoons about the economy.]

Another important piece of context is the thinking behind the tax cuts. Kennedy's economic policies were rooted in a Keynesian belief in the stimulative effects of budget deficits. While FDR and his aides had embraced countercyclical deficits as necessary in times of recession or depression, Kennedy was the first to advocate planned deficits in a time of neither war nor economic emergency. The aim was for the tax cuts to stimulate demand, driving the economy from the bottom up.

Republicans, by contrast, argued that while tax cuts were desirable, running an $11 billion deficit, "with no hope of a balanced budget for the foreseeable future, is both morally and fiscally wrong." That balanced-budget fixation was the ruling GOP philosophy until the rise of supply-side economics, which saw tax cuts as a way to boost investment (the supply side versus the Keynesian demand side) by helping the wealthy and business. Deficits were handled with the magical declaration that tax cuts pay for themselves.

The Myth of JFK as Supply Side Tax Cutter - US News and World Report

 

[Rshermr]

You'd be our resident expert at about wrapping a few scraps of truth around heaps of bullshit.

slate mag. the place one goes for information.....get one at your newsstand now..oh wait.

The notion of Kennedy as supply-side forerunner is a powerful myth, but it is a myth. Context is key. Conservatives love to quote a speech Kennedy gave at the Economic Club of New York in December 1962. Here's one quote—I've italicized the crucial part often left out: "Our present tax system, developed as it was, in good part, during World War II to restrain growth, exerts too heavy a drag on growth in peace time; that it siphons out of the private economy too large a share of personal and business purchasing power; that it reduces the financial incentives for personal effort, investment, and risk-taking." JFK was not expounding an implacable economic philosophy; he was speaking about a very specific circumstance. The top marginal tax rate was 91 percent, which JFK wanted reduced to a "more sensible" 65 percent. Compare that with today's 35 percent top rate, and ask: If supply-siders are so enamored of JFK's tax policies, would they advocate a return to a "more sensible" 65 percent top rate? Applying Kennedy's tax talk to the current structure, JFK biographer Robert Dallek says, is like comparing "apples and watermelons."

[See editorial cartoons about the economy.]

Another important piece of context is the thinking behind the tax cuts. Kennedy's economic policies were rooted in a Keynesian belief in the stimulative effects of budget deficits. While FDR and his aides had embraced countercyclical deficits as necessary in times of recession or depression, Kennedy was the first to advocate planned deficits in a time of neither war nor economic emergency. The aim was for the tax cuts to stimulate demand, driving the economy from the bottom up.

Republicans, by contrast, argued that while tax cuts were desirable, running an $11 billion deficit, "with no hope of a balanced budget for the foreseeable future, is both morally and fiscally wrong." That balanced-budget fixation was the ruling GOP philosophy until the rise of supply-side economics, which saw tax cuts as a way to boost investment (the supply side versus the Keynesian demand side) by helping the wealthy and business. Deficits were handled with the magical declaration that tax cuts pay for themselves.

The Myth of JFK as Supply Side Tax Cutter - US News and World Report

Please, Please. Don't give cons facts. It makes them CRAZY. They hate credible sources providing actual data. Because, they prefer to believe dogma. So much easier to be told what to believe. No actual thought required. And so convenient. Kind of like the tv dinner of information. Quick, easy, and provides the answers they need. Why would they ever care about truth. They can and do believe what they want. The whole truth thing is so over rated.

 

[Mad Scientist]

JFK was bad President who try to stop Federal Reserve with Executive Order.
https://en.wikipedia.org/wiki/Executive_Order_11110

But thankfully, Oswald kill him and LBJ reverse that EO.

 

[EdwardBaiamonte]

There was nothing Keynesian about Kennedy's tax cuts.

of course you are right!!

Bruce Bartlett: While there is no denying that most of Kennedy's economic advisers were Keynesians, it is worth remembering that he exiled his most Keynesian adviser, Harvard professor John Kenneth Galbraith, to India, where he served as ambassador. In his book, Ambassador's Journal, Galbraith tells how he tried to talk Kennedy out of the tax cut. He wanted to raise the deficit and give the economy a Keynesian kick by boosting government spending, not lowering revenues.

Greenberg and Shreve really have no good explanation for why Kennedy didn't implement Keynesian theories by raising spending, or implementing a temporary tax cut or some kind of tax-credit scheme, rather than reducing marginal tax rates. Most Keynesians would say that reducing marginal rates — especially for the rich and for capital gains — is just about the worst possible way of stimulating aggregate demand. Indeed, they made this same argument against the Bush tax cuts.

I think Kennedy was a better economist than his advisers. He cut tax rates for supply-side reasons, but used Keynesian arguments to sell them.

 

[EdwardBaiamonte]

There was nothing Keynesian about Kennedy's tax cuts.

You are so right. Here are the actual supply side cuts:


The Office of Tax Analysis of the United States Department of the Treasury summarized the tax changes as follows:[2]

reduced top marginal rate from 91% to 70%

reduced corporate tax rate from 52% to 48%

phased-in acceleration of corporate estimated tax payments (through 1970)

created minimum standard deduction of $300 + $100/exemption (total $1,000 max)