(3/4) JFK and the Reagan Revolution: A Secret History of American Prosperity Hardcover, by Lawrence Kudlow & Brian Domitrovic
Photo: president Reagan in the Oval Office
Permission: Official government photograph
JFK and the Reagan Revolution: A Secret History of American Prosperity, by Lawrence Kudlow & Brian Domitrovic
We have often heard that although Ronald Reagan cut income taxes and unleashed an extraordinary period of economic prosperity in America, John F. Kennedy did it first. The statement is, of course, accurate. But the full story, the precise parallel—the details and drama behind the scenes—has never really been drawn out. In this book, popular economist Lawrence Kudlow and economic historian Brian Domitrovic lay out the untold Kennedy story for the first time in an outstanding piece of economic history. “Most of us are well aware that Ronald Reagan was a tax cutter and that the horrible ‘stagflation’—weak economic growth in the context of prodigious price inflation—of the 1970s and early 1980s came to an end in the first years of his presidency,” the authors begin. “What is generally unknown, however, and what is the subject of this book, is that President John F. Kennedy in the early 1960s not only used but largely pioneered the same model” (p. 6). The Kennedy presidency, they add, launched the nation on a path of one of the longest and greatest economic expansions in its history, one that lasted until his successors abandoned his model. This policy, write Kudlow and Domitrovic, was a mix of tax-rate cuts and a strong and stable dollar. It was also, to the authors’ regret, a policy mix that probably should have been tried again in the 2000s but was not. And worse, it is a policy mix whose history has been obscured and even ignored and outright refused by Democrats—and especially by today’s Kennedy clan—who are proud to claim Jack Kennedy as theirs but are aghast when free marketers dare invoke his name in support of tax cuts. “A concerted effort has been made to present Kennedy as a Keynesian,” write Kudlow and Domitrovic, “when the opposite is in fact true” (p. 7). Also true is that Jack Kennedy didn’t arrive at this mentality immediately. It was a maturation that he came to only after carefully weighing divergent policy advice from battling advisers, with C. Douglas Dillon, his Republican Treasury secretary, eventually prevailing. And so this book reveals the hidden story of how that shift unfolded. To that end, here are several things that strike me as especially valuable in this historically rich and nicely written account. First, in their engaging narrative treatment of their subject, Kudlow and Domitrovic begin by debunking the myth that the pre-Kennedy years—that is, the Eisenhower years—were a halcyon period of booming growth amid massively high upper-income tax rates, specifically a 91 percent top rate. It’s amusing to watch liberals who once trashed the Eisenhower years now hoist them up as idyllic because America was (allegedly) blessed with the modern progressive dream of economic growth amid fabulously high tax rates that soaked the rich. Major growth and major wealth redistribution: the progressive dream. And yet, note Kudlow and Domitrovic, the prosperity of the 1950s was constantly interrupted and was shared by a shrinking segment of the citizenry. From 1949 through 1960, the economy went into recession four times—a dubious achievement that had happened only twice since 1929. The 1950s saw some high unemployment and what the authors call “serial recession—a downturn every three years or less” (p. 16). It was “small boom and small bust, small boom and small bust” (p. 19). No, it wasn’t terrible, and the Ike years were far preferable to the FDR years, but they weren’t pie in the sky. The authors include this analysis of the immediate pre-Kennedy period to set in context exactly what Kennedy was up against and what he reversed. Thus, the authors next show how JFK, by the second year of his presidency, had really “found himself ” as a tax cutter, after spending his first year listening to the give and take of differ...