Art Laffer, ‘godfather’ of
supply-side economic theory, is going to be awarded a presidential medal. He
doesn’t deserve it.
Next Wednesday, Donald Trump
will award the Presidential Medal of Freedom to the arch-conservative economist
Art Laffer.
Sadly, Laffer’s 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 Laffer’s signature supply-side
economics theory as pure nonsense. For his dubious role as the “godfather” of
Reaganomics, Slate dubbed him World’s
Worst Economist. He’s been called a key part of the “Intellectual
Rot of the Republican Party”. Esquire suggested that Laffer’s 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 nation’s highest civilian honor? Maybe it’s
because he recently wrote a book, Trumponomics, praising the president’s
economic agenda.
Most likely, it’s because
Laffer’s 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 won’t work without take-home pay.
At the extremes, the Laffer
curve is correct, but that doesn’t tell us anything about the points in the
middle. Laffer’s idea, however, was that a “tipping point” existed on the
continuum in between, where people’s incentives to work and invest decreased
because tax rates were too onerous.
From Laffer’s graph, Republicans had
the academic justification to justify slashing tax rates for corporations and
the rich.
President Ronald Reagan
adopted Laffer’s 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 Laffer’s 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 don’t work.
Each and every time state or
federal governments have tested Laffer’s 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 don’t 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 doesn’t 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. It’s high time that we leave
“Laffernomics”, and all the failed experiments it has inspired, to the
footnotes of history books.
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