Thursday, November 01, 2012

Jack Kennedy to the Rescue

President Barack Obama’s critics have a point when they say that Mr. Obama is having some difficulty defending the practical consequences of his policies. An unemployment rate of 7.8 percent four years after Mr. Obama said his progressive policies would result in an unemployment rate of 5.6 percent is certainly an economic bummer.

We are very far from normalcy. To date, Mr. Obama has shucked off the non-performing economy on former President George Bush, but the dodge of responsibility for an economy in cardiac arrest is beginning to annoy the unemployed.

Such laggard numbers suggests the opposite of progress and gives weight to the charge made by Mr. Obama’s critics that, at least in economic matters, the president for his entire term has been marching to the wrong drummer.

The right course, Republican Vice President Nominee Paul Ryan attempted to suggest in his first and only debate with Vice President Joe Biden, was outlined by President John Kennedy in a 1963 speech to the Economic Club of New York.

This name dropping brought forth a snarl from Mr. Biden: “Oh, so now you’re John Kennedy.”

Mr. Ryan withstood this eruption by flashing an indulgent smile. But he might easily have retorted, “No, I’m no John Kennedy. But John Kennedy was John Kennedy, and this is what he said:

“There are a number of ways by which the federal government can meet its responsibilities to aid economic growth… 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. In the past, this could be done in part by the increased use of credit and monetary tools, but our balance of payments today places limits on our use of those tools for expansion. It could also be done by increasing federal expenditures more rapidly than necessary, but such a course would soon demoralize both the government and our economy. If government is to retain the confidence of the people, it must not spend more than can be justified on grounds of national need or spent with maximum efficiency.
“The final and best means of strengthening demands 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…

“Our true choice is not between tax reduction, on the one hand, and the avoidance of large federal deficits on the other. It is increasingly clear that no matter what party is in power, so long as our national security needs keep rising, an economy hampered by restrictive tax rates will never produce enough revenues to balance our budget – just as it will never produce enough jobs or enough profits…
“In short, it is a paradoxical truth that tax rates are too high today and tax revenues are too low; and the soundest way to raise the revenues in the long run is to cut rates now… he purpose of cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus.”

Following Mr. Kennedy’s tax cuts, enacted after the president’s death in the Johnson administration, unemployment was reduced from 5.2% in 1964 to 4.5% in 1965 and further fell to 3.8% in 1966.  Though it had been estimated that the cuts would result in a loss of revenue, tax revenue increased in 1964 and 1965.

Kennedy’s profession of faith in the private economy, his clear recognition of the limits of government in effecting economic growth and his frank espousal of ideas now associated with the Chicago school of economics makes him an articulate opponent of the antique notions, disastrous in their consequences, presently being peddled by Mr. Biden and Mr. Obama, according to which tax dollars plucked from job producers during a recession and sent to Washington, there to be redistributed to select industries,  leads to increased economic activity. If you blow the dust from the Obama-Biden methodology, you arrive at the 1912 election, the high tide of the progressive era.

Package it as you will, the Obama campaign book is nothing new under the sun.  And Mr. Biden, who harks back in his oratory to the days of Eugene Debs, is piled high with loads of discredited dust.

Mr. Obama, it should be clear to everyone, is no Jack Kennedy, and it is no wonder that the mere mention of Mr. Kennedy’s name by a politician who embraces the thrust of his central idea – tax cuts spur economic growth and increase government revenues -- provoked a dog’s snarl from Mr. Biden.

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