Saturday, May 2, 2015

What J.F.K. Knew About Economics And What Most Democrats Today Don't

In 1963, President John F. Kennedy -- a Democrat -- was entering his second year in office and was enjoying robust economic growth.  Faster than that of either of his two predecessors.  Even so, he declared that "the absence of recession is not tantamount to economic growth."  What he was referring to was the fact that, despite good GDP numbers, nearly 1-in-5 Americans (+38 million) were in poverty and the unemployment rate was still high at 6%; although down from 7% before he took office.

Thus, to fix the poverty and unemployment problems, Kennedy proposed across the board cuts in income taxes and a reduction of the corporate tax rate; including reducing taxes on the rich from a rate of 91% to just 65%.  In doing so, he offered no offsetting spending cuts to pay for the reductions.  His argument for not cutting spending was simply his belief that"a rising tide lifts all boats".  Or, in other words,  lowering taxes would create jobs for those who were unemployed and in poverty and, as such, revenues would increase so much so that his proposed tax cuts would naturally be offset.  That is as long as spending was controlled. Sadly, Kennedy was assassinated before he could see his tax reductions passed into law.

Then, in 1964 and just three months after Kennedy's death, President Lyndon Johnson signed into law the Kennedy tax cuts in what is now known as the Revenue Act of 1964.  All of Kennedy's assumptions were proven correct.  As such, Johnson had the lowest average unemployment rate of any President since World War II.  Revenues grew 68% from when Kennedy took office.  The most astonishing fact was that, in just four years, the number of Americans in poverty fell from more than 38 million in 1964 to just over 25 million by the end of 1968.  A 34% reduction.

Today, Democrats like President Obama want to punish the rich and corporations with higher taxes.  In wanting to do so, they always point to President Clinton who, despite raising taxes, enjoyed strong economic growth.  However, what those same Democrats fail to recognize is that during Clinton's time, it was mostly due to the dot-com business and wealth boom of the 1990's.

Kennedy's economic prowess -- with economic growth faster for both him and Johnson than Clinton -- is anathema to most Democrats because, if they were to praise Kennedy for cutting taxes on the rich and corporations, this would be to deny themselves of their victimization strategy in order to get votes.  After all, corporations and the rich are supposedly at the heart of everything that is evil and wrong in this country and the rest of the world.  Kennedy was rich and he never tried to hide it; unlike Hillary Clinton who is also rich.  She would prefer that you think that she and Bill were dead broke when they left the White House; and, would like you to think they still are.   Of course, it's really hard to bash the rich when you're one of them.


Kennedy Presidential Library: JFK on the Economy and Taxes:

Economic Growth By President:

The Revenue Act of 1964:

U.S. Unemployment Statistics by President:

Historical Lesson of Lowered Tax Rates:

Census Bureau: Poverty from 1959 to 1968:

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