Art Laffer, godfather of supply-side economic theory, is going to be awarded a presidential medal. He doesnt deserve it
Next Wednesday, Donald Trump will award the Presidential Medal of Freedom to the arch-conservative economist Art Laffer.
Sadly, Laffers career has been heavy on punditry, light in academic rigor, and absolutely destructive for the average American and the long-term health and sustainability of our economy.
A number of economists have already dismissed Laffers signature supply-side economics theory as pure nonsense. For his dubious role as the godfather of Reaganomics, Slate dubbed him Worlds Worst Economist. Hes been called a key part of the Intellectual Rot of the Republican Party. Esquire suggested that Laffers turn as the architect of disastrous Brownback tax experiment in Kansas should hang like a dead possum around his neck for the rest of his days.
So why exactly is Trump awarding such a man with the nations highest civilian honor? Maybe its because he recently wrote a book, Trumponomics, praising the presidents economic agenda.
Most likely, its because Laffers theory just so happens to serve as the basis for every terrible tax cut that Trump and the Republican party have passed for decades.
It all began in 1974, when Laffer walked into a bar with Dick Cheney and Donald Rumsfeld, who were working for the Ford administration at the time. Out of it came the Laffer curve, a U-shaped graph illustrating the relationship between tax rates and revenue.
The ends of the curve are basic enough at a tax rate of 0, the government will raise $0 in revenue, and at a tax rate of 100, the government will still raise $0 in revenue because people wont work without take-home pay.
At the extremes, the Laffer curve is correct, but that doesnt tell us anything about the points in the middle. Laffers idea, however, was that a tipping point existed on the continuum in between, where peoples incentives to work and invest decreased because tax rates were too onerous.
From Laffers graph, Republicans had the academic justification to justify slashing tax rates for corporations and the rich.
President Ronald Reagan adopted Laffers supply-side theory wholesale in his deregulatory and low-tax agenda. In the decades since, Laffer has clung to relevancy, appearing on cable news to vehemently defend the alleged benefits of slashing taxes, even when the evidence proved otherwise.
More recently, in Kansas, where an extreme version of Laffers theory was implemented and tax rates were cut by nearly a third, the state suffered one of the worst fiscal disasters in recent history.
The Laffer curve has done immense damage to the US economy in the 40 years since its inception. It also ignores a fundamental reality: tax cuts for the rich dont work.
Each and every time state or federal governments have tested Laffers trickle-down theory, deficits balloon, rich folks hoard their wealth at the top, and average Americans suffer.
The greatest periods of growth in our country, such as the 1950s and 1990s, have coincided with decisions to raise taxes on wealthy individuals and corporations.
If we want to return to those periods of prosperity, instead of letting inequality continue to rise unchecked, we must demand our elected leaders acknowledge that trickle-down economic policies dont work.
Modern-day Republicans seem to be hell-bent on perpetually ignoring basic economics in order to cut taxes for their rich friends, but that doesnt mean the rest of us have to acquiesce.
Laffer is a man whose sole Medal of Freedom-worthy achievement appears to be uniting staunchly conservative and ardently progressive economists against him. Its high time that we leave Laffernomics, and all the failed experiments it has inspired, to the footnotes of history books.
Morris Pearl is chair of Patriotic Millionaires, which focuses on promoting public policy solutions that encourage political equality, guarantee a sustaining wage for working Americans, and ensure that wealthy individuals and corporations pay their fair share of taxes. He previously was a managing director at BlackRock, one of the worlds largest investment firms.
This post was curated & Posted using : RealSpecific
If you enjoyed our content, we'd really appreciate some "love" with a share or two.
And ... Don't forget to have fun!