Jack Kemp

It is understandable that a majority of Democrats want to oppose President Bush's tax cuts, but it is incomprehensible when Republicans do. Last week, three Republican senators (Olympia Snowe, Maine; George Voinovich, Ohio; John Chaffee, Rhode Island) walked away from Bush's economic growth program by voting with a united Democratic front in the Senate to cut the president's tax proposal in half. They voted for an amendment proposed by Sen. John Breaux, D-La., to cut the tax cuts in half because he thinks it is wrong to cut tax rates "when you have a $300 billion deficit, and then added on to that, we're at war and we don't know how much it's going to cost."

Senate Democratic Leader Tom Daschle, from South Dakota, reflected this sentiment when he said, "We still think (the current tax-cut level) is way too much, given the need for sacrifice in this country."

Sacrifice? What, and to what purpose? Daschle doesn't seem to comprehend that by keeping tax rates too high and "sacrificing" economic growth, we don't help the war effort, we hinder it; we don't get more revenue, we get less.

It is precisely when deficits are increasing due to sluggish economic growth and we suddenly confront emergency spending needs that tax rates should be slashed to speed growth and increase the size of the economy to pay for the new spending. The temporary increase in the deficit contemplated by the president's tax proposals is minuscule in the first five years (less than 1 percent of GDP) and thereafter will be completely offset - and eventually reversed - by higher growth. Vice President Cheney said "... the president's package will generate new growth, it will expand the tax base and thus increase tax revenue to the federal government ultimately."

That's what President Kennedy proposed, and it is really inexplicable and disappointing that Democrats never seem to learn from the experience of Kennedy's tax cuts. It's also disappointing, and unfathomable to me, that some Republicans will not learn from the success of President Reagan's tax rate reductions in the early 1980s.

In 1963, as the military buildup in Vietnam was beginning and defense spending was on the rise, Congress enacted Kennedy's tax-rate reductions.

Economic growth picked up and the deficit fell. By 1965, economic growth had increased sufficiently that in spite of increased defense spending, the budget was essentially balanced. Except for one year (1968), the deficit was 1.5 percent of GDP or less throughout the decade, even as defense spending averaged 8.5 percent of GDP, which is more than twice the 4.4 percent we will spend on defense this year, including the president's emergency request for an additional $75 billion.

Jack Kemp

Jack Kemp is Founder and Chairman of Kemp Partners and a contributing columnist to Townhall.com.
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