Call me a houngan: a priest in the religion of Voudou or, anyway, voodoo economics. For therein lies a tale.
Farewell, Peter Teeley, who, per his recent New York Times obituary, coined the phrase “voodoo economics” for George H.W. Bush, Reagan’s 1980 primary rival.
Peter B. Teeley, who as the sharp-penned press secretary for George H.W. Bush during his 1980 presidential campaign coined the term “voodoo economics” to describe the tax and spending plans of the candidate’s rival at the time, Ronald Reagan, died on Friday in Washington. He was 84.
Among Mr. Reagan’s campaign promises was a plan to cut taxes on corporations and the wealthy, which he argued would increase economic growth and investment, producing gains that would eventually benefit everyone.
In thinking about how to respond to the plan, Mr. Teeley recalled an editorial joking that President Jimmy Carter’s economic policies had been put together by witch doctors. And what, he asked himself, do witch doctors do?
“Then it hit me,” he told the historian Jon Meacham for his biography of Mr. Bush, “Destiny and Power” (2015). “They do ‘voodoo,’ and I put that in Bush’s speech.”
Clearly an obituarist, not an economist. This cub reporter misrepresents Reagan’s campaign promises as “a plan to cut taxes on corporations and the wealthy.”
Reagan campaigned on and proposed a 30% across-the-board tax rate cut. Not tax cut.
Across the board, as in for everyone. Voters enthusiastically approved.
Reagan won the ’80 race handily. In ’84, landslide victory.
Democrats, Chairman Dan Rostenkowski, D-Ill., and Speaker Tip O’ Neil, D-Mass., followed by Rep. Dick Gephardt, D-Mo., and Sen. Bill Bradley, D-N.J., led the crusade to topple those nosebleed rates applying exclusively to the wealthy.
Followed by President Bill Clinton, a Democrat, who signed the legislation dramatically cutting the capital gains rate. For which Sen. Joe Biden, D-Del., voted.
America hasn’t seen the kind of sustained and robust economic growth we enjoyed under Reagan and Clinton since, well, Reagan and Clinton. (No, not even under Trump 45. Sorry.)
Why? Politicians are human and, thus, vain. They do not fancy following in the wheel ruts of their predecessors. They wish to make a mark.
And politicos like being “the smartest kid in the room.” A fickle media will not proclaim them such for perpetuating their predecessor's legacy, however successful.
Nearly half a century ago America confronted a towering Misery Index (double-digit inflation + high unemployment), 20% mortgage interest rates, an "energy (really, monetary policy) crisis" and a sluggish economy.
Jimmy Carter proclaimed from the White House that nobody knew what caused inflation. Actually, some of us did know.
The O.G. supply side cabal went prospecting for a sponsor for (future Nobel Economics Prize winner) Robert Mundell and (future Presidential Medal of Freedom winner) Arthur Laffer’s prescription to invert the then-conventional wisdom of high tax rates and a floating (meaning sinking) dollar.
Wall Street Journal editorialist Jude Wanniski found, and sold, Rep. Jack Kemp.
The Plan debuted in National Affairs as “The Mundell-Laffer Hypothesis.” What came to be called “the Laffer Curve” — cutting prohibitive tax rates to allow the tax base to expand to bring in greater tax revenues — was, originally, a mere footnote.
The bulk of the supply-side prescription was about restoring the stability of the dollar, through a gold standard, eventually the Rueff/Lehrman classical gold standard of Jack Kemp’s Gold Standard Act of 1984.
Reagan, with a signal to tighten, delegated monetary affairs to Fed chairman Paul Volcker. Volcker tightened brutally, crushing inflation and setting the stage for almost 40 years of modest inflation.
Mr. Teeley, like all Establishment Republicans of his day and ever since, found the idea that you could cut tax rates, increase defense spending (in successful pursuit of winning the Cold War) and simultaneously eliminate the federal deficit to be ridiculous.
“Voodoo economics.”
And ridicule it they did. Do consider, however, that on the day that Reagan declared for the presidency on November 13, 1979 the Dow was at 814. Right, eight hundred and change.
As I write this, the Dow nears 43,000+. That’s not adjusted for inflation but ... we get the gist.
U.S. GDP (again not adjusted for inflation) has risen from $2.67 trillion a year to $29.35 trillion. I could provide you with a cornucopia of facts showing how much we prosper under a stable dollar coupled with relatively low tax rates.
And would prosper again under smart tax rate cuts (not tax cuts) and a dollar as good as gold.
Next? America yearns for a new generation of houngans and mambos, priests and priestesses of prosperity.
And ... there remain a handful of us O.G. supply-siders ready to support policies to Make America Prosperous Again.
Mr. President, bring on Voodoo 2!
Ralph Benko, co-author of "The Capitalist Manifesto" and chairman and co-founder of the 200,000+ follower "The Capitalist League," is the founder of The Prosperity Caucus and is an original Kemp-era member of the Supply-Side revolution that propelled the Dow from 814 to its current heights and world GDP from $11T to $104T. Read Ralph Benko's reports — More Here
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