Here's a "man-bites-dog" story. I recently testified before the Democratic Policy Committee chaired by Sen. Byron Dorgan of North Dakota. The hearing was centered on the economic effects of President Bush's tax reforms. It was commendable - and gutsy - for Dorgan to invite me, and I am sorry the White House didn't also accept the invitation to testify. It was real theater: Kemp vs. the Democratic Party establishment defending the Bush tax cuts.
I did it for two reasons. First, I believe in the Bush plan. Second, for our democracy to be strong, both political parties must be strong and capable of competing for votes on the field of ideas. Before Ronald Reagan came along, Republicans couldn't propose ideas to move America forward because the party was obsessed with deficits. Richard Nixon and Barry Goldwater opposed the Kennedy tax cuts - exactly the situation the Democratic Party finds itself in today. If John F. Kennedy were in the Senate today, he would support Bush's tax cuts, and there would be a healthy competition between the two parties on what is the best way to get America moving again.
As an old quarterback, I've always rejected pessimism, but even I became temporarily depressed at the DPC hearing as I listened to the Democratic leaders fall prey to economic fallacies.
Former Clinton Labor Secretary Robert Reich's testimony before the DPC illustrates what I mean. Reich said, "The problem of the federal debt is clearly a growing problem. What Jack Kemp keeps saying to you is don't worry about the debt because these tax reductions are going to grow the economy ... so fast that the debt shrinks in proportion to the total economy. Now that was the argument we heard in the 1980s. We ended up the 1980s and the early 1990s with, as you recall, this $300 billion debt, as deficit, as far as the eye could see and an economy that basically ground to a halt."
Reich's encapsulation of economic history is a distortion and in some instances an outright fabrication. Economic growth soared after the Reagan/Kemp/Roth tax-rate reductions took effect, and the federal budget deficit - temporarily swollen by a deep and lengthy recession that occurred before the tax cuts even took effect and exacerbated by excessive spending and collapsing inflation - was virtually identical the day President Reagan left office (2.8 percent of GDP) to the day he was inaugurated (2.7 percent).
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