Kennedy v. Kennedy

By Jeff Jacoby

The Boston Globe
(Expanded version of column appearing in today's Globe)

March 15, 2001

 

    In an eloquent and focused speech to the Economic Club of New York, the president made his case for tax relief.  Rate cuts for all taxpayers, he argued, are just what the economy needs.

 

    "The most direct and significant kind of federal action aiding economic growth is ... to cut the fetters which hold back private spending," the president said.  He urged Congress to "reduce the burden on private income and the deterrents to private initiative which are imposed by our present tax system" and vowed not to retreat from his pledge of "an across-the-board, top-to-bottom cut in personal and corporate income taxes."

 

    The evidence is clear, he told his audience, "that our present tax system ... exerts too heavy a drag on growth ... siphons out of the private economy too large a share of personal and business purchasing power, [and] reduces the financial incentives for personal effort, investment, and risk-taking."  He insisted -- defying the class warriors -- on tax cuts not only for low-income workers but also "for those in the middle and upper brackets, who can thereby be encouraged to undertake additional efforts and ... invest more capital."

 

    It was a forthright, convincing call for sweeping tax cuts, but the president who delivered it wasn't George W. Bush.  It was John F.  Kennedy, speaking on December 14, 1962.  His remarks that day were the first presentation of arguments that he and his aides would repeat throughout 1963, and that Lyndon Johnson would press until the tax bill was finally enacted early in 1964.

 

    JFK's words are as persuasive today as they were four decades ago -- so much so that a group of Republicans has resurrected them for use in radio ads promoting Bush's tax-cut proposal.  Narrated by Steve Forbes, the conservative publisher who has long championed lower taxes, the ads are designed to put pressure on Democratic senators in states Bush carried last year.  "If Jack Kennedy can support tax cuts," Forbes says in the version of the ad airing in Louisiana (for example), "so can Mary Landrieu."

 

    But not everybody welcomes President Kennedy's contribution to the tax-cut debate.  Ted Kennedy, for one, is in a snit.

 

    "It is intellectually dishonest and politically irresponsible," he fumes in a letter to the team that created the ads, "to suggest that President Kennedy would have supported such a tax cut.... If President Kennedy were here today he ... would be outraged by comparisons between his 1963 tax cut and the current proposal."

 

    It is one of the paradoxes of Senator Kennedy's career that, on issue after issue, he has come to embrace political positions far removed from those of his late brother.  JFK consistently pushed for higher spending on defense, for instance.  Ted has consistently pushed for the opposite.  President Kennedy was a Cold Warrior who vigorously supported efforts to contain the Soviet Union and defeat its proxies.  Senator Kennedy -- in conflicts ranging from Cuba to Cambodia -- generally opposed such efforts.  If Ted is against something, odds are Jack would have been for it.

 

    Like tax cuts.

 

    Ted voted for his brother's tax bill in 1964.  But he has long since become an enemy of tax relief, and especially of across-the-board rate cuts.  He fought the Reagan cuts of the early 1980s, which were explicitly modeled on those of the Kennedy administration.  He has worked to defeat just about every Republican proposal for income tax cuts since, including those offered by Newt Gingrich and Bob Dole in the 1990s.  No one is surprised that he is against the Bush tax cuts too.

 

    What is surprising, though, is how strikingly he mischaracterizes the JFK tax cuts.

 

    "President Kennedy's tax cut was responsible," Ted asserts.  "It was targeted toward the middle class.  Only 6 percent of President Kennedy's tax cut went to those earning over $300,000 in today's dollars" -- i.e., the top 1 percent of income earners.  But that is true only because in 1964, the top 1 percent paid a far smaller share of the total tax burden than they do now.  Back then, they accounted for 20 percent of all taxes collected; today they pay a staggering 35 percent.

 

    By any rational yardstick, the Kennedy tax cut was enormous, and it was a boon to the rich.  It cut the top marginal rate a whopping 21 percentage points, from 91 to 70.  Bush's plan lowers rates at the top by only 6.6 percentage points.  For those in the lowest bracket, JFK cut the tax rate to 14 percent; Bush drops them all the way to 10 percent.

 

    The 1964 tax cuts were the largest in US history to that point.  Bush's don't come close to setting a record.  As a share of the nation's economic output, JFK's tax bill was twice as generous as Bush's -- 2 percent of GDP vs. 1.1 percent, according to the National Taxpayers Union.  Likewise as a share of federal revenue: The Kennedy cuts "refunded" 12.6 percent of taxes collected. Bush would give back only 6 percent.

 

    On that day in 1962, President Kennedy delivered a ringing endorsement of supply-side tax relief.  What he advocated, he said, was "a tax cut designed to boost the economy, increase tax revenues and achieve" -- today we would say maintain -- "a budget surplus."  That is as worthwhile a goal today as it was 40 years ago, and as achievable.  Jack Kennedy would have been the first to say so.