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Tuesday, May 05, 2009
Larry Kudlow :: Townhall.com Columnist
Jack Kemp's Big Ideas
by Larry Kudlow
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When I first visited with Jack Kemp in his congressional office in Washington, D.C., in the late 1970s, I couldn’t help but notice the row of books on his desk. There was Friedrich Hayek, Ludwig von Mises, Benjamin Anderson, and Milton Friedman. And of course there was Jude Wanniski’s The Way the World Works.

Jack extracted big ideas from these big books, and he applied them to an American nation that was in big trouble. His detractors called him a jock, just as they called Ronald Reagan a dunce. Yet both men proved their critics wrong.

Working with Wanniski, Arthur Laffer, Robert Mundell, Alan Reynolds, Steve Entin, Norman Ture, and many others, Jack developed an agnostic economic formula that solved the vexing problem of economic stagflation and malaise.

Lower tax rates for everyone, he argued. Make it pay after-tax to work, produce, invest, and take risks, and the country will get more of all of it. Along with lower marginal tax rates to reignite economic growth, stabilize the free-falling dollar to curb inflation. And add free trade to that mix, since tariffs are nothing more than taxes on the purchase and sale of international goods.

Foster policies that will unleash our God-given creativity and imagination, Jack Kemp argued. And let individuals take it from there.

Jack was always talking about a rising tide to lift all boats, borrowing from the JFK phrase of the early 1960s. In fact, in meetings in the mid-1970s, Laffer and Wanniski helped persuade Kemp to follow in JFK’s footsteps and propose reduced tax rates across-the-board to get the economy growing again.

Jack, an unbelievably energetic activist, then helped persuade Reagan of the merits of this new policy approach. The economic dons of Cambridge and New Haven scoffed. They wanted to raise taxes, allegedly to curb inflation, and pump up the money supply to expand the economy. Kemp and his group told the dons they had it exactly backwards. He was right. The Ivy League was wrong.

Kemp actually thought of himself as a bleeding-heart conservative. First and foremost, this son of a truck driver wanted to improve the plight of the non-rich in the inner-city housing projects and those trapped in the dead-end welfarism of the barrios. He worked to expand the economic fortunes and political rights of all minority groups, including all those blue-collar workers who were getting killed by high tax rates and virulent inflation.

A perpetual optimist, Jack told the Republican convention in 1996, “You see, democratic capitalism is not just the hope of wealth, but it’s the hope of justice. When we look into the face of poverty, we see the pain, the despair, and need of human beings. But above all, in every face of every child, we must see the image of God.” He then added, “I believe the ultimate imperative for growth and opportunity is to advance human dignity.”

Nobody talks like that anymore. Politicians should. It’s inspirational stuff. Continued...

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About The Author

Lawrence Kudlow is host of CNBC's Kudlow & Company

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Oh, and one more thing:
yes, we do agree that government is too large and too intrusive. In addition to scrapping our current tax system, I'm also for removing tariffs on imported goods -- another tax on consumers and more government protection for businesses. I'm a free market capitalist, and I realize that the purpose of government is to protect individual liberty.

"It is to secure our rights that we resort to government at all." ~ Thomas Jefferson

re: Apolitical
I'll stop beating the proverbial horse except on one point: the flat tax, while *collected* on income, is still a consumption tax. Ultimately, when you balance the equation, what's being taxed is what's being consumed: the business income minus business expenses (which includes salaries) -- *consumption* (businesses don't have any income if nothing is consumed). That's why if you ever go to a tax forum sponsored by the Heritage Foundation (as I have) or Americans for Tax Reform (as I have) or the Cato Institute or the traveling Republican Congressmen sales vs. flat tax debate in the 1990s (Reps. Tauzin and Armey, which I did), you'll hear them talk about the two main competing consumption tax plans: the "FairTax", and the flat tax. I get into this a lot with "FairTax" advocates (and get heaped with loads of personal insults), but I assure you, the flat tax is considered a consumption tax.

One other thing: you're not disclosing anything to the government except what the businesses are already disclosing in terms of their expense paying you your salary, which everyone then takes the same deduction and exemption on. There's going to be a lot of that under "FairTax" as well because extensive auditing will be necessary to enforce it, since "businesses" don't pay any "FairTax" and there's a HUGE incentive to get out of paying that 30% tax.
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