In a couple of previous posts I was discussing Wanniski and his analysis of the Laffer Curve. I pointed out that in theory the ideal tax rate-which is Point E on the Laffer Curve-may sometimes be higher than the present tax rate. Yet I noted that you never hear Laffer call for either a higher rate or even leaving it at the current rate.
http://diaryofarepublicanhater.blogspot.com/2013/07/jude-wanniski-way-world-works-and.html
http://diaryofarepublicanhater.blogspot.com/2013/07/jude-wanniski-and-battle-for-reagans_20.html
However, I've come across this article of Wanniski's in 1991. It's very interesting. He wrote about what a hypothetical Democrat running for President in 1992 would have to do to get the Dems back in. Bear in mind that at the time the conventional wisdom-among Democrats as well-was that Bush was unbeatable.
"From 1932 to 1964, the Democratic Party won seven of nine presidential contests. The Republicans have won five of six since and, according to virtually universal expert political opinion, will win again in 1992. The experts, in fact, have been arguing for some while that the national electorate, as scattered among the 50 states, has crystallized into a GOP "Electoral Lock" on the White House, even as local electorates continue to deliver Democratic majorities to the U.S. Congress and most state governments. Disheartened Democrats also contemplate demographic trends that show younger voters increasingly identifying with the party of the "successful Presidents" they have known, Ronald Reagan and now, George Bush. It begins to seem that the Republican Party may become even more dominant as the Ruling Party than it was in the seven decades after the 1860 victory of its first presidential candidate, Abraham Lincoln, a period in which the GOP won 14 of 18 presidential elections. This thinking is becoming conventional wisdom."
http://www.polyconomics.com/index.php?option=com_content&view=article&id=1270:a-democratic-white-house-scenario&catid=32:essays&Itemid=28
For a list of Wanniski's articles and essays see here
http://www.polyconomics.com/index.php?option=com_content&view=category&id=32:essays&Itemid=28&layout=default
While he agreed that Bush was the favorite he wanted to draw the way a Democrat would have to go about winning. What's rather jarring is his tax policy prescription for the Democratic candidate:
"The Democratic contender should advocate elimination of the capital gains tax as well as lower payroll taxes, with a new, increased top income-tax threshold at a higher rate. The party must abandon its reliance on easy money as a policy instrument, reviving President Kennedy's formulas of sound money and greater rewards for risk-taking as central features of entrepreneurial capitalism. Unlike President Kennedy, whose foreign economic policies were dominated by the elites, the Democratic nominee should offer this distinctly American message to the world at large.."
I pretty much discount the gibe about easy money-it's not clear what he had in mind-the Carter 70s? However, it's striking that Clinton took two of his three recommendations-he raised the top rate from 31% to 39.6% but raised the income floor for the top rate from $86,000 to $250,000.
http://diaryofarepublicanhater.blogspot.com/2013/07/bruce-bartlett-on-tax-reform_12.html
He also cut the capital gains rate not to zero but down from 28% to 20%. Actually, the one thing he didn't do I wish he had-cut the payroll tax that is. However, he did raise the minimum wage-Wanniski probably would have much preferred the payroll tax cut.
Still he was quite prescient in his policy prescriptions.
In January 1980, Ronald Reagan conceptualized the campaign he was about to begin as one in which he would represent the interests of Main Street business. When told only three CEOs of the Fortune 500 had endorsed his candidacy at that point, Reagan said he would be happy to have his opponents share the other 497. "I've got to be the candidate of the shopkeeper, the farmer, the independent, the entrepreneur. There are a lot more of them."
"The appropriate concept for a Democrat in 1992 would include these small business interests, but extend to the traditional Democratic coalition of labor, the minorities and the disadvantaged in a different way. The concept is that a government's primary role is to provide a context in which all Americans can realistically aspire, if they choose, to become "shopkeepers, farmers, independents and entrepreneurs" or in any other way develop their innate, God-given potential. The concept is thus more inclusive than Reagan's -- which in the general election of 1980 was directed from the top of the opportunity ladder, not much below its middle rungs. The two Reagan campaigns never once directly addressed the aspirations of black America, for example."
http://diaryofarepublicanhater.blogspot.com/2013/07/jude-wanniski-way-world-works-and.html
http://diaryofarepublicanhater.blogspot.com/2013/07/jude-wanniski-and-battle-for-reagans_20.html
However, I've come across this article of Wanniski's in 1991. It's very interesting. He wrote about what a hypothetical Democrat running for President in 1992 would have to do to get the Dems back in. Bear in mind that at the time the conventional wisdom-among Democrats as well-was that Bush was unbeatable.
"From 1932 to 1964, the Democratic Party won seven of nine presidential contests. The Republicans have won five of six since and, according to virtually universal expert political opinion, will win again in 1992. The experts, in fact, have been arguing for some while that the national electorate, as scattered among the 50 states, has crystallized into a GOP "Electoral Lock" on the White House, even as local electorates continue to deliver Democratic majorities to the U.S. Congress and most state governments. Disheartened Democrats also contemplate demographic trends that show younger voters increasingly identifying with the party of the "successful Presidents" they have known, Ronald Reagan and now, George Bush. It begins to seem that the Republican Party may become even more dominant as the Ruling Party than it was in the seven decades after the 1860 victory of its first presidential candidate, Abraham Lincoln, a period in which the GOP won 14 of 18 presidential elections. This thinking is becoming conventional wisdom."
http://www.polyconomics.com/index.php?option=com_content&view=article&id=1270:a-democratic-white-house-scenario&catid=32:essays&Itemid=28
For a list of Wanniski's articles and essays see here
http://www.polyconomics.com/index.php?option=com_content&view=category&id=32:essays&Itemid=28&layout=default
While he agreed that Bush was the favorite he wanted to draw the way a Democrat would have to go about winning. What's rather jarring is his tax policy prescription for the Democratic candidate:
"The Democratic contender should advocate elimination of the capital gains tax as well as lower payroll taxes, with a new, increased top income-tax threshold at a higher rate. The party must abandon its reliance on easy money as a policy instrument, reviving President Kennedy's formulas of sound money and greater rewards for risk-taking as central features of entrepreneurial capitalism. Unlike President Kennedy, whose foreign economic policies were dominated by the elites, the Democratic nominee should offer this distinctly American message to the world at large.."
I pretty much discount the gibe about easy money-it's not clear what he had in mind-the Carter 70s? However, it's striking that Clinton took two of his three recommendations-he raised the top rate from 31% to 39.6% but raised the income floor for the top rate from $86,000 to $250,000.
http://diaryofarepublicanhater.blogspot.com/2013/07/bruce-bartlett-on-tax-reform_12.html
He also cut the capital gains rate not to zero but down from 28% to 20%. Actually, the one thing he didn't do I wish he had-cut the payroll tax that is. However, he did raise the minimum wage-Wanniski probably would have much preferred the payroll tax cut.
Still he was quite prescient in his policy prescriptions.
In January 1980, Ronald Reagan conceptualized the campaign he was about to begin as one in which he would represent the interests of Main Street business. When told only three CEOs of the Fortune 500 had endorsed his candidacy at that point, Reagan said he would be happy to have his opponents share the other 497. "I've got to be the candidate of the shopkeeper, the farmer, the independent, the entrepreneur. There are a lot more of them."
"The appropriate concept for a Democrat in 1992 would include these small business interests, but extend to the traditional Democratic coalition of labor, the minorities and the disadvantaged in a different way. The concept is that a government's primary role is to provide a context in which all Americans can realistically aspire, if they choose, to become "shopkeepers, farmers, independents and entrepreneurs" or in any other way develop their innate, God-given potential. The concept is thus more inclusive than Reagan's -- which in the general election of 1980 was directed from the top of the opportunity ladder, not much below its middle rungs. The two Reagan campaigns never once directly addressed the aspirations of black America, for example."
What this piece shows is that he was much less partisan, much less beholden to the GOP than was Laffler who many see as long since abdicating any genuine role as economist.
Clearly by his recommendation for a higher top rate-with a higher floor-shows that he understands the Laffer Curve better than Laffler himself.
P.S. Of course, once Clinton did make this real, the rest is history as the Dems vote since and won 4 of 6 elections losing the electoral vote only once.
P.S. Of course, once Clinton did make this real, the rest is history as the Dems vote since and won 4 of 6 elections losing the electoral vote only once.
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