Larry Kudlow on Tax Cuts and the Democrat Hiding Within Reaganomics

Earners keepers? According to Larry Kudlow, there's a secret history behind the US's history of tax reduction and it involves John F. Kennedy.

Larry Kudlow: The so-called liberal argument, which is probably more liberal today than it has been in many, many decades, they argue that we should have equality. Everybody should be equal. We should all make the same amount of money. We should all have the same assets and wealth. I don't believe that. I think that's fundamentally inimical to free market capitalism. I think that's a kind of Soviet East Europe old communist socialist model that has never worked. You can't make everybody equal. They tried to redistribute income and wealth rather than increase it. My credo here is instead of making the economic pie smaller and handing smaller pieces to everyone, let's make the pie bigger and get everybody a larger piece. And I think history has proven, really since the fall of Soviet communism, that that model of income leveling is a bad model. It's a model that doesn't work. It took seventy years for the Soviets to fall but they fell.

And China, for example, the other big communist country, I won't say that they have fallen but they've changed their economy. It's now much more of a market oriented economy. In my judgment markets distributes goods. Markets set prices. And if there are free opportunities inside markets that's how people who work hard will do well. And I think the ethos in America is to work hard. That's always been where we are. In other words we all start at the same beginning, the starting line is the same. By law and tradition we should be prejudice free, color free, gender free, whatever. We all have the same legal starting line, but that doesn't mean we all finish at the finish line at the same and I think that's human nature. So we talk about this in the book, and in particular as you asked about tax policy, taxing rich people- at high confiscatory rates has never worked in this country. It's outside of our tradition. It's been tried a couple of times. F.D.R. tried it in the 1930s and it didn't work. Economy was no better in the late '30s than it was when he took over in 1932. The war spending did help, but the great new deal experiment failed.

The great times of prosperity in this country is when we lower tax rates and we shrink government, we put government in a lesser position. I'm a believer in the private sector. The government does not run the economy; we run the economy. So you go back and look at some unbelievable prosperity periods like the post-Civil War period, unbelievable prosperity. The 1920s, unbelievable prosperity. The 1960s, unbelievable. The 1980s and 90s, fantastic economic growth. Those all have some common characteristics and usually they include low marginal tax rates so you keep more of what you learn. That's a reward for your work and investment and entrepreneurship. Less government. Fewer regulations. That doesn't mean no government. It doesn't mean no regulations. I'm for a safety net. But it means at some point you go to far and you're strangling businesses. You're strangling small businesses. That's who I'm really worried about. So that's my basic argument.

John F. Kennedy, to get right to the chase in this book, John F. Kennedy's tax legacy has been lost. It's a very strange story and that's one of the reasons why Brian Domitrovic and I wrote this book. Kennedy was the first post-World War II supply side tax cutting president. He was the first. Eisenhower wouldn't do it in the 1950s, despite certain urban legends the 1950s were a lousy economy, three recessions in eight or nine years. Kennedy knew, having won of my cats whisker against Nixon, Kennedy knew that he had to grow the American economy at five percent a year. That was his target. Nixon didn't go there. And Kennedy never really told us in the 1960 election how he was going to grow at five, but he said this is what we're going to do. And then he went back-and-forth with his advisers in 1961 and 1962. The first step he made was one I disagree with. He allotted government spending, lots and lots of government spending, safety net spending, infrastructure spending, you name it, which his liberal academic advisers suggested to him. That was their idea spend, spend and leave tax rates high. Do you know what the top tax rate was? Ninety-one percent. It's inconceivable.

So you earn an extra dollar, you get nine cents; the government gets the rest. That's a big number. That's a big number. So anyway, make a long story short, or at least this part of the story short, Kennedy had several Republicans in his cabin. This is an interesting side note very important for today. One of them was a guy named Douglas Dylan who came from a famous banking family just like Kennedy he has as much money as JFK's father and is a banking guy and owned a vineyard south of France. He was Eisenhower's under secretary of state. Anyway, Kennedy puts him in the top tier treasury department and Dylan makes the argument that the liberals were wrong and that instead we should give men and women more opportunities, more rewards, more incentives to grow the economy. If you get paid more you're likely to work more, or if the tax rate is lower on investment for a new business, if you are rewarded with higher pay after tax you're going to be rejuvenated. You're going to get out there and go for the gold. And that hadn't been happening since World War II. That hadn't happened in the 1950s.

Let me just throw out one number for you. It's in the book. A 91 percent tax rate, so as I said you make an extra dollar you get nine cents, the government gets 91 cents. Ronald Reagan as a movie actor quit acting because he decided nine cents on the dollar was not enough for him to motivate him. True story. Kennedy cut the top tax rate from 91 to 70. So instead of taking home nine cents on the dollar you took home 30 cents on the dollar, that's an over 200 percent increase in after tax income. And Kennedy argued he was the pioneer, not Reagan, Kennedy, that this would create opportunities and incentives. You'll get government out of the way. I will get people working harder. It will get them to take risks to start new companies. A lot of new companies, a lot of technology and Silicon Valley stuff was started in the '60s after the Kennedy tax cuts. That was his argument. And then 20 years later the top rate was at 70 and Reagan cut it to 28 in two steps, 1981 and 1986, 28. So now instead of getting 30 cents on the dollar you got 72 cents on the dollar. It's about 145 percent increase. That's what I call reward. It's a basic economic principle. We don't work to finance the government. We don't work unless we are compensated for the hard work. We might go on welfare but that's not going to necessarily help the country, it helps the poor but we want less poverty. We want more opportunity. So give us more after-tax income. That's what Kennedy did and it's called an incentive. That's what Reagan did and it's called an incentive and both times it worked. That's the thing.

Kennedy the Democrat. A lot of people said he was a liberal Democrat, actually he was not he was very conservative, but Kennedy the Democrat using a Republican treasury secretory, Dug Dylan, Reagan 20 some years later, the Republican who wooed Democrats in Congress to get his tax cuts through they presided over the best economic decades postwar and it is not a coincidence that they both were tax cutters. And we can talk about this later, but they also wanted a steady and strong reliable dollar as our currency, but incentives a matter. The government does not run our economy. We run our economy as long as we are properly rewarded for our efforts and our entrepreneurship. And the Soviet Union the Soviets ran the economy. It was horrible. Horrible. Rapid poverty. China it was horrible. East Europe horrible. Latin America horrible. And then came the free market revolution and things picked up quite a bit because people had more economic freedom. And that's why I argue - I'm not talking politics here I'm just talking straight out economics.

On December 14 in 1962, at the Waldorf Astoria Hotel in New York City, President John F. Kennedy unveiled an economic plan that would breathe new life into the stagnant US economy. His focus was on growth incentives; he proposed reducing marginal tax rates for all taxpayers, cutting the lowest earners' taxes from 20% to 14%, and the highest earners' taxes from 91% to 65%. His tax code also closed a series of loopholes and tax exceptions. These measures worked, and the U.S economy grew by roughly 5% every year, for almost eight years.

Radio broadcaster and CNBC senior contributor Larry Kudlow credits JFK as the initial force behind Reaganomics, and believes Democrats today should take heed and embrace tax cuts over tax hikes. Kudlow doesn’t believe in taxing your way to prosperity, and it’s the thread throughout his new book JFK and the Reagan Revolution: A Secret History of American Prosperity, which he’s co-authored with Brian Domitrovic. The book aims to correct the historical record, which Kudlow and Domitrovic feel omits the truth about Kennedy’s economic persuasion, which came about under advice from his Republican Treasury Douglas Dillon.

Are Kudlow and Domitrovic on the money with their thesis? Some people are strongly opposed, such as broadcaster, entrepreneur and bestselling author Thom Hartman, who says that "there's just one major, glaring problem with Kudlow's analysis: It's not true." Read here for a counterargument to Kudlow’s view.

Despite his chat with Big Think kicking off on the misguided notion that "we all start at the same beginning, the starting line is the same," hear Kudlow out and consider whether there's validity to his argument for tax cuts – does a rising tide really lift all boats? Or would its success hinge on the simultaneous closing of tax loopholes and exceptions, true to Kennedy's 1962 plan?

Kudlow and Domitrovic's book is Reagan Revolution: A Secret History of American Prosperity.

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Public health crisis: Facebook ads misinform about HIV prevention drug

Facebook's misinformation isn't just a threat to democracy. It's endangering lives.

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  • Facebook and Instagram users have been inundated with misleading ads about medication that prevents the transmission of HIV (PrEP), such as Truvada.
  • Over the years, Facebook's hands-off ad policy has faced scrutiny when it comes to false or ambiguous information in its political ads.
  • Unregulated "surveillance capitalism" commodifies people's personal information and makes them vulnerable to sometimes misleading ads.

LGBT groups are saying that Facebook is endangering lives by advertising misleading medical information pertaining to HIV patients.

The tech giant's laissez-faire ad policy has already been accused of threatening democracy by providing a platform for false political ads, and now policy could be fostering a major public-health concern.

LGBT groups take on Facebook’s ad policy

According to LGBT advocates, for the past six months Facebook and Instagram users have been inundated with misleading ads about medication that prevents the transmission of HIV (PrEP), such as Truvada. The ads, which The Washington Post reports appear to have been purchased by personal-injury lawyers, claim that these medications threaten patients with serious side effects. According to LGBT organizations led by GLAAD, the ads have left some patients who are potentially at risk of contracting HIV scared to take preventative drugs, even though health officials and federal regulators say the drugs are safe.

LGBT groups like GLAAD, which regularly advises Facebook on LGBT issues, reached out to the company to have the ads taken down, saying they are false. Yet, the tech titan has refused to remove the content claiming that the ads fall within the parameters of its policy. Facebook spokeswoman Devon Kearns told The Post that the ads had not been rated false by independent fact-checkers, which include the Associated Press. But others are saying that Facebook's controversial approach to ads is creating a public-health crisis.

In an open letter to Facebook sent on Monday, GLAAD joined over 50 well-known LGBTQ groups including the Human Rights Campaign, the American Academy of HIV Medicine and the National Coalition for LGBT Health to publicly condemn the company for putting "real people's lives in imminent danger" by "convincing at-risk individuals to avoid PrEP, invariably leading to avoidable HIV infections."

What Facebook’s policy risks 

Of course, this is not the first time Facebook's policy has faced scrutiny when it comes to false or ambiguous information in its ads. Social media has been both a catalyst and conduit for the rapid-fire spread of misinformation to the world wide web. As lawmakers struggle to enforce order to cyberspace and its creations, Facebook has become a symbol of the threat the internet poses to our institutions and to public safety. For example, the company has refused to take down 2020 election ads, largely funded by the Trump campaign, that spew false information. For this reason, Facebook and other social media platforms present a serious risk to a fundamental necessity of American democracy, public access to truth.

But this latest scandal underlines how the misconstrued information that plagues the web can infect other, more intimate aspects of American lives. Facebook's handling of paid-for claims about the potential health risks of taking Truvada and other HIV medications threatens lives.

"Almost immediately we started hearing reports from front-line PrEP prescribers, clinics and public health officials around the country, saying we're beginning to hear from potential clients that they're scared of trying Truvada because they're seeing all these ads on their Facebook and Instagram feeds," said Peter Staley, a long-time AIDS activist who works with the PrEP4All Collaboration, to The Post.

Unregulated Surveillance Capitalism

To be fair, the distinction between true and false information can be muddy territory. Personal injury lawyers who represent HIV patients claim that the numbers show that the potential risks of medications such as Turvada and others that contain the ingredient antiretroviral tenofovir may exist. This is particularly of note when the medication is used as a treatment for those that already have HIV rather than prevention for those that do not. But the life-saving potential of the HIV medications are unequivocally real. The problem, as some LGBT advocates are claiming, is that the ads lacked vital nuance.

It also should be pointed out that Facebook has taken action against anti-vaccine content and other ads that pose threats to users. Still, the company's dubious policies clearly pose a big problem, and it has shown no signs of adjusting. But perhaps the underlying issue is the failure to regulate what social psychologist Shoshana Zuboff calls "surveillance capitalism" by which people's experiences, personal information, and characteristics become commodities. In this case, paid-for personal-injury legal ads that target users with certain, undisclosed characteristics. It's been said that you should be wary of what you get for free, because it means you've become the product. Facebook, after all, is a business with an end goal to maximize profits.

But why does a company have this kind of power over our lives? Americans and their legislators are ensnared in an existential predicament. Figure out how to regulate Facebook and be accused with endangering free speech, or leave the cyber business alone and risk the public's health going up for sale along with its government.