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JFK 50: The Fiscal Legacy

Earlier this week I wrote on the fiftieth anniversary of the assassination of John F. Kennedy – arguably the most studied (yet still the most distorted) event in American history. This column exits that particular rabbit hole and delves into something infinitely more tangible – Kennedy’s economic policies. Upon taking…

Earlier this week I wrote on the fiftieth anniversary of the assassination of John F. Kennedy – arguably the most studied (yet still the most distorted) event in American history.

This column exits that particular rabbit hole and delves into something infinitely more tangible – Kennedy’s economic policies.

Upon taking office in 1961, Kennedy inherited an economy in recession (like Barack Obama did in 2009). America’s productivity was falling, its unemployment was rising and its income levels were slipping.

Unlike Obama, though, Kennedy didn’t borrow trillions of dollars and blow it on unnecessary government.

What did he do? He cut taxes – for all income earners.

And what did Kennedy’s tax cuts produce? The second-longest economic expansion in American history … which lasted all the way until the recession of 1969-70.

Obama? More than five years after passing his “stimulus” plan (and engaging in a host of other interventionist measures) he’s still presiding over chronically high unemployment and anemic economic growth.

This stuff isn’t rocket science, people … tax cuts spur growth. Meanwhile government growth only “stimulates” one thing: Government.

Liberals like to say JFK’s tax cuts were more targeted that Ronald Reagan or George W. Bush’s – and that they were specifically crafted to help the middle class. Both statements are flat out false. Kennedy’s tax cut was much bigger than Reagan or Bush’s – and its relief was spread out all along the income spectrum.

“Contrasting the size of the tax cuts with national income shows that the Kennedy tax cut, representing 1.9 percent of income, was the single largest first-year tax-cut of the post-WW II era,” an analysis from The Tax Foundation reveals. “The Reagan tax cuts represented 1.4 percent of income while none of the Bush tax cut even breaks 1 percent of income. The Kennedy tax cuts would only have been surpassed in size by combining all three Bush tax cuts into a single package.”

Meanwhile columnist Jeff Jacoby of The Boston Globe notes that Kennedy’s plan  “cut the top marginal rate a whopping 21 percentage points.”

So much for those liberal myths …

John F. Kennedy vowed in his inaugural address to “get America moving again.” And he did – by cutting taxes.

OBAMA: NO JFK
OBAMA: NO JFK

Don’t get us wrong, Kennedy wasn’t perfect on tax and spending issues. Far from it. He endorsed a lot of liberal government programs and embraced a lot of non-core government functions. On December 14, 1962 – less than a year before he died – Kennedy gave an address to the Economic Club of New York. During that speech, he outlined a number of these items (including expanded government intervention in education and more federal funding for “research and technology”).

But it’s what Kennedy said after touting these programs that matters …

“The most direct and significant kind of federal action aiding economic growth is to make possible an increase in private consumption and investment demand–to cut the fetters which hold back private spending,” he said. “The final and best means of strengthening demand among consumers and business is to reduce the burden on private income and the deterrents to private initiative which are imposed by our present tax system; and this administration pledged itself last summer to an across-the-board, top-to-bottom cut in personal and corporate income taxes to be enacted and become effective in 1963.”

Then Kennedy – the greatest orator the White House had seen in a century (and perhaps the greatest ever) – offered one of the most concise encapsulations of limited government/ fiscal conservative ideology we’ve ever heard.

“In short, to increase demand and lift the economy, the federal government’s most useful role is not to rush into a program of excessive increases in public expenditures, but to expand the incentives and opportunities for private expenditures,” he said.

Amen, Mr. President. Amen.

Too bad Obama didn’t follow your advice …

The irony in all this? Such talk today is considered the realm of the right wing “whack-a-doodle.” It’s the sort of rhetoric websites like FITSNews get tagged as “radical” for espousing.

Well, free market economics isn’t radical … it’s common sense. It’s just a shame no one in Washington, D.C. – including the vast majority of “Republicans” understands that anymore.

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20 comments

Jackie Chiles November 22, 2013 at 9:33 am

Boomers sure have quite an obsession with JFK. He died 50 years ago. Can we move on now?

Reply
sweepin November 22, 2013 at 9:47 am

In the interest of information, you might have noted that the Kennedy cuts involved lowering the highest marginal rate for individuals from 91% to 65%, the lowest bracket from 20% to 14%, and the corporate rate from 52% to 48%.

That’s quite in contrast when comparing to current rates isn’t it?

Reply
Will Folks aka Sic November 22, 2013 at 9:48 am

Agreed. And the subsequent cuts also stimulated periods of economic growth. What has Obama “stimulated?”

Reply
Funny guy November 22, 2013 at 9:50 am

Economic misery?

Reply
Ed November 22, 2013 at 9:53 am

You might want to check the Dow. The unemployment rate. More importantly, if the current tax rates were 91% or even 65% there would be room to cut them. But you knew that was the point of that first point…you just chose to ignore it.

Reply
Smirks November 22, 2013 at 10:02 am

Consequently, income taxes has since gone from a top tax bracket of 65% to 35% (albeit they are now back up to 39.6% now). At a rate of 35% we weren’t seeing a lot of growth during the recession, now were we?

You really want to cut taxes even further, even when the top tax rates are dismally low? Even when capital gains is low? Even when corporate taxes are low enough that the largest corporations pay little to nothing? How low do taxes need to go? What effect will that have on the deficit? How much will we have to cut to balance the budget then?

To say that JFK lowering income taxes from a max rate 91%, ninety one percent!, to 65% means that he would somehow lower it below even 35% is ridiculous. Just like you can’t spend yourself out of a hole, at some point you have to admit that tax cuts are not going to make a significant difference.

Reply
TontoBubbaGoldstein November 22, 2013 at 11:16 am

You really want to cut taxes even further, even when the top tax rates are dismally low?

So Smirks…TBG is left to assume that you favor top tax rates that are euphorically high?

*facepalm*

Reply
vicupstate November 22, 2013 at 12:01 pm

Fits, OBama cut taxes in his stimulus package..

Reply
idcydm November 22, 2013 at 10:14 am

Back then the lowest bracket actually paid income tax.

Reply
Jackie Chiles November 22, 2013 at 11:13 am

From my understanding, there were even more loop holes back then than now, so the actual tax rate meant little.

Reply
? November 22, 2013 at 2:12 pm

Ding! Ding! Ding!

“We have a winner Johnny! What does Mr. Chiles get for his effort?”

“Scorn and derision Monty!”

Effective tax rates are completely different that actual tax rates.

Just look at unemployment figures today for example. They are nothing more than propaganda pieces.

Reply
Sailor November 22, 2013 at 11:07 am

This has to qualify as one of your dumber columns. To compare JFK’s tax cuts to current circumstances is idiotic. How many jobs did the Bush tax cuts create?
When JFK took office, the rates were astronomical (see sweepin’s comments). When Obama took office, not so much and when he did repeal the Bush cuts, he foolishly left them in place for incomes up to $400,000. That threshold should be $150,000. or $200,000. because that’s where the money is and somebody has to pay the bills.

Reply
TontoBubbaGoldstein November 22, 2013 at 11:21 am

To compare JFK’s tax cuts to current circumstances is idiotic.

You are correct… just not why you think…

The difference between then and now is the size and scope of government. Since our “leaders” have no problem running massive deficits, tax cuts may not have much positive effect. Raising taxes sure as Hell won’t, though.

Reply
tomstickler November 22, 2013 at 11:10 am

[I am blatantly cribbing from Wikipedia here]

Among the legislation passed by Congress during the Kennedy Administration, unemployment benefits were expanded, aid was provided to cities to improve housing and transportation, funds were allocated to continue the construction of a national highway system started under Eisenhower, a water pollution control act was passed to protect the country’s rivers and streams, and an agricultural act to raise farmers’ incomes was made law.

A significant amount of anti-poverty legislation was passed by Congress, including increases in social security benefits and in the minimum wage, several housing bills, and aid to economically distressed areas. A few anti-recession public works packages, together with a number of measures designed to assist farmers, were introduced.

Major expansions and improvements were made in Social Security (including retirement at 62 for men), hospital construction, library services, family farm assistance and reclamation. Food stamps for low-income Americans were reintroduced, food distribution to the poor was increased, and there was an expansion in school milk and school lunch distribution.

The most comprehensive farm legislation since 1938 was carried out, with expansions in rural electrification, soil conservation, crop insurance, farm credit, and marketing orders. In September 1961, the Arms Control and Disarmament Agency was established as the focal point in government for the “planning, negotiation, and execution of international disarmament and arms control agreements.”

Altogether, the New Frontier witnessed the passage of a broad range of important social and economic reforms. [end of plagiarism]

It’s me, back again. You will notice the difference between the Kennedy Administration and the Obama Administration. Look at the first line of the Wikipedia extract. See that? “legislation passed by Congress during the Kennedy Administration.”

Too bad Obama does not have Kennedy’s genetic heritage. In 1960, Democratic candidate John F. Kennedy narrowly won the presidency and power shifted again to the Democrats who dominated both houses of Congress until 1994.

But the only thing that Will Folks sees in all of this is that “Kennedy cut taxes.” Well, at least he still had much higher taxes than we do now, and that revenue paid for all the benefits listed above. He also enjoyed his party controlling Congress so he could actually get something done.

Reply
idcydm November 22, 2013 at 11:17 am

You forgot to mention they also raised the SS tax when they increased benefits.

Reply
idcydm November 22, 2013 at 11:48 am

“Too bad Obama does not have Kennedy’s genetic heritage. In 1960,
Democratic candidate John F. Kennedy narrowly won the presidency and
power shifted again to the Democrats who dominated both houses of
Congress until 1994”. So as long as it was a Democrat lowing the income tax rates it was OK?

Reply
vicupstate November 22, 2013 at 11:14 am

There was NOT a recession in 1961. And the economy was quite prosperous the prior 8 years, WITHOUT the Kennedy tax cut. JFK also raised the minimum wage in 1961. Why not give that the credit? I guess that doesn’t fit the narrative, so just ignore it.

Reply
Juan Viche November 22, 2013 at 12:22 pm

search JFK Murder Truth telling – Heading to the Grassy Knoll on November 22nd – 50th Anniversary

Reply
Thomas November 22, 2013 at 1:39 pm

You have to remember something. Back then, we were on a bi-metal backed fiat. The first dollar bill I ever found was a 1959 silver certificate. The dollar was also backed by gold in Fort Knox. Why bring it up? Because run away government spending supported by Federal Reserve printing presses was not yet invented. Under the gold standard, the US Treasury was only allowed to print fiat at a 40% ratio to the gold in Fort Knox. Say there was 10 billion in fiat circulating. There had to be 4 billion in gold backing it up! Today, our gold, if it is still there(hard to tell without audits) at 1760.00 an ounce would cover 500 billion of our 17 trillion dollar debt. Kennedy was maneuvering to place monetary policy back to the US Treasury away from the 1913 Federal Reserve Act. BTW, the Federal Reserve Act charter is due for renewal next month. Nothing from anyone on this. Should the Federal Reserve, not even a branch or department of our government, be given another 100 year charter without a debate?

Reply
dpowersdoc November 23, 2013 at 11:41 pm

You seem; like of the right, to be ignorant of history and context. Q&A from the speech you adore indicates you have it almost entirely wrong. Check facts.

Q. There has been much talk in Washington
and elsewhere of reductions in personal income tax rates to 15 percent
for the lowest brackets, and 65 for the highest brackets, in personal
income taxes, and for a reduction in corporate rates to 47 percent. What
many of these questioners would like to know is, are those figures
generally in the ball park?

THE PRESIDENT. This legislation is
going to have very difficult traveling at best, and I would suggest
giving it at least the most favorable start we can, as I said in my
speech, by permitting Mr. Dillon to present this before the Ways and
Means Committee in January. So that I would suggest that the details of
the tax reduction should wait upon presentation to the Ways and Means
Committee. There might be something for everybody, though.

Reply

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