"It's a paradoxical truth that tax rates are too high today and tax revenues are too low, and the soundest way to raise revenues in the long run is to cut the rates now." Those are the words of President John F. Kennedy in 1962. He went on to say, "The purpose of cutting taxes now is not to incur a budget deficit but to achieve the more prosperous, expanding economy which can bring a budget surplus."
What's more, in Kennedy's annual message to Congress, circa 1963, he said: "In today's economy, fiscal prudence and responsibility call for tax reduction, even if it temporarily enlarges the federal deficit. ... Why reducing taxes is the best way open to us to increase revenues."
Today, in this presidential debate over a 21st century economic growth agenda, it is ironic that John McCain is far closer to JFK policies than the presumptive Democratic candidate, Barack Obama. Obama has proposed raising tax rates, raising tariffs and expanding government regulations, all of which, in the words of Nobel Prize winning economist Robert Mundell, would plunge the United States into a big recession and further weaken the dollar.
McCain and Obama have now each proposed detailed economic policies, and the contrast between the two could not be more dramatic. We believe the overriding and dominant political question in this election is whose economic policies would be best for the future of our wobbly economy and our weak currency.
Unlike John Kennedy, Barack Obama has proposed not to cut tax rates, but to increase every single major federal tax, except for his "George McGovern-like" tax rebate of $1,000. Barack has proposed to increase individual income tax rates to 39.6 percent. He has proposed to increase capital gains taxes, from 15 percent to somewhere between 20 percent and 28 percent. Incredibly, he has proposed to more than double the tax rate on dividends, from 15 percent to 39.6 percent. He has proposed to increase payroll taxes on workers earning over $250,000 a year to 12.4 percent on income above that threshold and to restore the estate tax to the confiscatory rate of 55 percent. Ugh!
Amity Shlaes, author of "The Forgotten Man," a new history of the Great Depression, has argued that along with his protectionist policies on trade, Obama has proposed the exact same policy mix that led to the Depression of the 1930s. During the primaries, Obama railed against free trade, proposing even to renegotiate our free trade agreement with our two largest trading partners, Canada and Mexico. Inexplicably, he opposes the Colombian Free Trade Agreement, even though it primarily removes tariffs on U.S. exports into that country.