Arthur Laffer begins his Wall Street Journal column with a quote from John F. Kennedy.
Tax reduction thus sets off a process that can bring gains for everyone, gains won by marshalling resources that would otherwise stand idle—workers without jobs and farm and factory capacity without markets. Yet many taxpayers seemed prepared to deny the nation the fruits of tax reduction because they question the financial soundness of reducing taxes when the federal budget is already in deficit. Let me make clear why, in today's economy, fiscal prudence and responsibility call for tax reduction even if it temporarily enlarged the federal deficit—why reducing taxes is the best way open to us to increase revenues.
—President John F. Kennedy,
Economic Report of the President,January 1963
It's not as if the political class is unaware of these things. Tax cuts may cause an immediate drop in federal revenues, but over the long term revenues will increase because economic activity will increase. Bill Clinton was a beneficiary of years if economic growth that came about because of the Reagan tax cuts. Even Democrats understand this. Notice the growing number who have recently decided that letting the Bush tax cuts expire is not smart policy.
But let's not make the mistake of assuming that anybody in the political class cares a whit about the state of the economy except for its impact on their re-election chances. Democrats are particularly sensitive at the moment. Their aggressive grab for power that started when they jammed health care legislation through is beginning to look like a strategic blunder of epic proportions. They gambled on buying enough votes with stimulus and bailout money to withstand voter backlash from the inevitable economic downturn. At this point it appears they'll lose that bet. Their class warfare tactics have burdened businesses large and small with unprecedented uncertainty, and as a result the economy is in the tank. Demand side stimuli haven't put a dent in our economic woes and Democrats are getting very nervous. But it's only their jobs and their perks that they're worried about.
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