by Jonathan Decker
Next week, Donald Trump will award the Presidential Medal of Freedom to “the Godfather of supply-side economics,” Arthur Laffer. Trump’s decision to bestow America’s highest civilian honor on Dr. Laffer is one for enormous celebration, as few have contributed more to American prosperity than he has.
Arthur Laffer came to prominence in the 1970s by championing income tax rate reduction (i.e. ‘The Laffer Curve’) as well as a stable dollar (via the Mundell-Laffer hypothesis). Taken together, these two pillars amount to what historian Nathan Lewis refers to as a “magic formula” for economic growth. President Reagan used this playbook to lay the groundwork for a decades-long economic expansion in America and around the globe. It has been estimated that the economic expansion of the 80s and 90s lifted one billion people out of extreme poverty worldwide.
This economic expansion also occurred at a deeply pivotal moment in American history. As Ed Fuelner stated at the tenth year anniversary of the Kemp-Roth tax cuts, at the time of this legislation’s passage:
The Third World was mesmerized by Soviet power and caught up in the myth of socialist-style planning. But with stunning rapidity, the American “economic miracle” helped stimulate a crisis in the Communist and Socialist world and helped catalyze a worldwide democratic capitalist revolution…
Takeaway: the economic boom ignited by the original supply-side movement gave Reagan the leverage he needed to defeat the Soviet Union.
The original supply-side team, including Arthur Laffer, Jack Kemp, Jude Wanniski, Robert Novak, Bob Bartley, Robert Mundell, Lewis Lehrman, George Gilder, Jeffrey Bell, Steve Forbes, John Mueller, Larry Kudlow, Stephen Moore, and Ralph Benko, rescued the U.S. economy from the stagflation of the Carter years and set us on a course of peace and prosperity.
Fast forward to today: Laffer continues to promote the principles of free enterprise and economic growth, both as a co-founder of the Committee to Unleash Prosperity and as one of the principle advisors on Trump’s Tax Cuts and Jobs Act. The iconic Fred Barnes reported:
[Laffer] was a key player in the Reagan cuts of 1981 that touched off an economic boom lasting two decades. He struck again in 2017 by helping to shape Trump’s tax cut…
The Reagan tax cut had been phased in over three years and Laffer felt this was a costly mistake. It allowed the economic downturn to continue through 1982 before the tax cut could spur a recovery. In 2017, the Senate wisely took Laffer’s advice and rejected a phase-in.
Next week, Arthur Laffer’s extraordinary life and impact on U.S. economic policy will be honored in a small ceremony at the White House. But for all of Arthur Laffer’s remarkable contributions to economics and American prosperity, we should all be celebrating too.
Photo credit: Gage Skidmore