The Supply Side

Wednesday summary: Domitrovic on the Gold Commission; Romney discusses the flat tax and gold standard; Pethokoukis on tax fairness.

noreply@blogger.com (Sean R) — Thu, 26 Jan 2012 04:12:00 +0000

From Forbes, Brian Domitrovic provides the history behind Newt Gingrich’s Gold Commission.

The WSJ uses Mitt Romney’s tax return to argue for fundamental tax reform.

On NRO, Larry Kudlow reports Romney believes the President’s class warfare strategy is designed with him (Romney) in mind.

From Forbes, Steve Forbes advises Mitt Romney to come out with a strong pro-growth, pro-capitalism message.

On The Kudlow Report, Romney critiques Gingrich’s flat tax plan and suggests, oddly, that Congress could manipulate the dollar’s exchange rate under the gold standard:

At The American, James Pethokoukis responds to the President on tax fairness.

From PJ Media, David Goldman argues the true unemployment rate, about 1 in 4, guarantees a single term for President Obama.

At RCM, John Tamny suggests hedge fund success implies stock market weakness.

On Peter Schiff’s radio show, Steve Forbes critiques Romney on the China currency debate:

IBD explains Dodd-Frank’s highly negative effect on small and community banks.

CNSNews notes commodity price increases under President Obama.

At Barron’s, Pimco’s Bill Gross suggests the economy is pulled between deflationary and inflationary forces:

From The Hoover Institution, Richard Epstein critiques Massachusetts Senate candidate Elizabeth Warren’s economic proposals.

The NYT highlights the President’s tough talk on China.

Tuesday round up: Benko, Kadlec, and The NY Sun on Gingrich and gold; Mitchell on Romney's tax response; Moore and Pethokoukis on the SOTU.

noreply@blogger.com (Sean R) — Wed, 25 Jan 2012 03:59:00 +0000

From Forbes, Ralph Benko and Charles Kadlec link Newt Gingrich’s embrace of a gold dollar to his rising popularity.

The NY Sun notes the monetary affinity growing between Gingrich and Ron Paul.

At International Liberty, Dan Mitchell criticizes Mitt Romney’s debate response on his tax rate.

On The Kudlow Report, Stephen Moore and James Pethokoukis discuss the State of the Union address:

At Alhambra Partners, Joe Calhoun argues the world’s economic problems call for skepticism.

From First Trust, Brian Wesbury suggests the economy is strong.

At Reason, Peter Suderman notes that the expansion of food stamps began under President Bush.

In The NYT, Bruce Bartlett discusses the fundamentals of tax reform.
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*Today, two additional items below.

BWR on Gingrich.

noreply@blogger.com (Sean R) — Wed, 25 Jan 2012 03:10:00 +0000

Great analysis from our friends at Bretton Woods Research.
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Democrats Worried About Gingrich

As global leaders prepare to meet in Davos, Larry Summers writes in the Washington Post today that increasing demand and certainty should be the top economic priority, particularly because this is the best way to reduce government deficits. In other words, the demand-siders coalescing in Switzerland will be focusing on ways to reignite economic growth.

This shift in focus is the consequence of three things: 1) the failure of the massive Keynesian stimulus bills in 2009, 2) the failure of austerian policy to resolve the European sovereign debt crisis, and 3) most importantly, the U.S. presidential election, which will pit President Obama's demand-side model against a Republican model that is becoming increasingly pro-growth due to the recent surge by Newt Gingrich.

Certainly, the economic model of the U.S. President in 2013 will have a major influence around the world on how to deal with the global malaise. As a result, demand-siders and Democrats, tied to Obama, are fighting for their political lives. Their emerging economic strategy is to emphasize more stimulus or 'shovel-ready projects', and some tax cuts for lower and middle-class Americans while raising taxes on the wealthiest.

Romney has been stumbling in recent weeks because he continues to be identified as a Republican-In-Name-Only (RINO) and refuses to improve his economic plan. At the same time, Gingrich is surging because he has highlighted his hard money position, which is the perfect complement to his across-the-board tax cuts. His call for a Gold Commission was, without a doubt, the primary reason for his come-from-behind victory in South Carolina. If Gingrich sticks with his emphasis on low taxes and hard money, he will win the nomination.

To be sure, the conventional notion that Romney is the biggest threat to Obama is wrong. Gingrich is the biggest threat.

As we think about the political marketplace and debate a few steps in advance, a Gingrich nomination would likely cause demand-siders and Democrats to pursue another strategy because their 'growth plan' wouldn't grow the economy and it will not win over the electorate.

Look for them to attack Gingrich as a budget-balancing austerian. In so doing, they'll be trying to bait Gingrich into explaining how he would cut the deficit and defending why many government programs must be cut. Republican austerianism is usually a major political loser. But given Gingrich's experience in 1995-1996, we expect that he'll keep the focus on growth as the best means to shrink the deficit. Even Larry Summers would agree with that.

Why didn't the Bush tax cuts work?

noreply@blogger.com (Sean R) — Wed, 25 Jan 2012 02:32:00 +0000

A frequently asked question is if tax cuts are so economically positive, why did the economy collapse following the Bush tax cuts? Here's my view of the proper supply-side answer:

1) The 2001 Bush tax cuts were largely consumption-oriented rebates and credits that did little to incentivize new economic production.

2) The 2003 tax cuts were on the supply side, meaning oriented towards lowering the penalty on additional work and investment, and they did improve the economy. Growth accelerated from 2003-2007, unemployment fell rapidly, and despite high federal spending the budget deficit shrank as a percentage of GDP.

3) Unfortunately, at the same time US monetary authorities were pursuing a weak dollar policy which encouraged investors to shunt capital into hedges like gold, oil and real estate. The effect was: A) reduced investment in the productive economy; and B) soaring prices in commodities and real estate, the latter of which became a bubble that burst in summer 2007.

4) As supply-side eminence grise Robert Mundell has explained repeatedly, almost a year after the apex of the mortgage crisis, Ben Bernanke's Federal Reserve compounded the damage by suddenly tightening* money, causing the dollar to soar 30% in three months, the largest such appreciation in such a short time in peacetime history. Tight money sent the over-leveraged economy into a liquidity crunch, crashed the financial system, and broke the economy's back.

5) Since then, the dollar has see-sawed back and forth by wide margins, creating elements of both deflation (tight credit, low interest rates, generally moderate CPI) and inflation (high commodity prices), ensuring continued economic malaise. Combined with pending tax increases and additional costs associated with Obamacare and added regulation, it is an inhospitable climate in which to take economic risks. Investors and entrepreneurs are sidelined.

6) The bottom line is: supply-side tax rate cuts work, but not in a vaccum. The supply-side policy mix requires tax cuts and a stable dollar. The last decade proved Art Laffer's maxim that in terms of economic impact, if regulation is a one, tax cuts are a 10, and monetary policy is a 100. Get money wrong and you're sunk, no matter how good your fiscal policy.

*Note: tightening in this case refers to ceasing to loosen at the expected pace. From May to September 2008 the Fed paused its fast rate cuts at 2%, catching markets by surprise and leading to a mad scramble for cash. The dollar soared and gold plummeted. Bernanke may have paused due to CPI rising to 5.5% and oil hitting $140/barrel.

Monday items: The NY Sun and Weekly Standard applaud Gingrich's Gold Commission; Levin on Reagan's supply-side record; Grant on the 1920-21 recession.

noreply@blogger.com (Sean R) — Tue, 24 Jan 2012 04:07:00 +0000

The WSJ notes Newt Gingrich’s rise, compliments his citation of Ron Paul’s hard money mantra, and urges Mitt Romney to take a bolder tax reform stance.

The NY Sun applauds Gingrich’s naming Lewis Lehrman and James Grant to his Gold Commission.

In The Weekly Standard, Bill Kristol praises the Gold Commission.

On The WSJ, Kim Strassell discusses Romney’s tax return and Gingrich’s Freddie Mac contract:

In The WSJ, Stephen Moore notes voter enthusiasm for Gingrich.

The Right Scoop cites radio host Mark Levin challenging Gingrich on the creation of supply-side economics. Levin says, incorrectly, that Reagan ran on supply-side economics in 1974. In fact, according to Bob Novak's memoir, The Prince of Darkness: 50 Years Reporting in Washington, Reagan was converted to supply-side economics (tight money, marginal tax rate cuts) at a private meeting with Jack Kemp in early 1979.

At RCM, John Tamny notes the stock market’s weakness versus gold.

In The Washington Post, James Grant examines the economy’s quick recovery, despite government austerity, from the recession of 1920-21.

In The NYT, Romney advisor Greg Mankiw offers four principles for tax reform.

At Globe Asia, Steve Hanke proposes a non-military solution to disputed territory.

Weekend edition: Kudlow on Romney; Newt names Lehrman and Grant to Gold Commission; Santorum bashes gold.

noreply@blogger.com (Sean R) — Tue, 24 Jan 2012 03:53:00 +0000

Newt Gingrich’s campaign names Lew Lehrman and James Grant to its Gold Commission.

From Newt.org, Lehrman and Grant accept Gingrich’s offer.

CBS News reports Rick Santorum bashing Gingrich for his Gold Commission proposal:

"One is, well, a little radioactive in the sense of you just don't know what he's going to do or what he's going to say," Santorum said, citing Gingrich's comments earlier in the day that he'd like to reexamine the gold standard.

On The Kudlow Report, Stephen Moore responds to Paul Krugman on the tax rate paid by millionaires such as Romney:

On NRO, Larry Kudlow applauds Mitt Romney’s attack on crony capitalism.

In The NYT, David Leonhardt notes that most US taxpayers pay less than Romney’s 15%.

The WSJ breaks down taxes paid by income groups.

On Fiscal Times, Bruce Bartlett examines Romney’s tax arrangements.

At Forbes, Nathan Lewis explains gold’s role in establishing a stable currency.

In The NYT, former Obama car czar Steven Rattner chides progressives for minimizing deficits, comparing them to “fiscally irresponsible” supply-siders.

At The WSJ, Steve Hanke notes the positive property tax treatment in growing football playoff cities New York, San Francisco, and Boston versus Baltimore, which is stuck with high tax rates and a low population:

In The WSJ, Edward Lazear explains that despite the lower unemployment rate, it’s not any easier to get a job.

On RCP, John Tamny defends investment banking from Occupy Wall Street criticism.

At TWS, Matthew Continetti reviews Jeff Bell’s new book on social conservatism, The Case for Polarized Politics.

Thursday summary: Blom and The NY Sun applaud Newt's gold commission; Mitchell, IBD and Woodhill on Romney; Moore on Paul.

noreply@blogger.com (Sean R) — Fri, 20 Jan 2012 03:31:00 +0000

In The NY Sun, Andresen Blom suggests Newt Gingrich has a crucial wedge issue in his gold commission.

Also in The NY Sun applauds Gingrich’s gold commission idea but recommends moving beyond the commission to outright advocacy.

The WSJ validates Gingrich’s food stamp critique of President Obama.

At NRO, Larry Kudlow wonders whether Gingrich can highlight growth ideas over his personal issues.

On The Kudlow Report, Steve Forbes discusses Gingrich’s candidacy:

IBD defends the tax rate Mitt Romney pays.

On International Liberty, Dan Mitchell rebuts criticism of Romney’s tax payments.

In Forbes, Louis Woodhill argues companies like Romney’s Bain Capital are the alternative to bankruptcies and bailouts.

On Fox Business News, Stephen Moore discusses Ron Paul’s call to eliminate the income tax:

The Economist suggests the US/China trade deficit won’t be improved by appreciating the yuan.

Wednesday items: Newt proposes gold commission; Domitrovic on Romney at Bain; Jenkins on the financial meltdown.

noreply@blogger.com (Sean R) — Thu, 19 Jan 2012 03:43:00 +0000

Big news: The Weekly Standard reports Newt Gingrich advocates a gold commission:

The WSJ argues Mitt Romney should use news of his 15% tax rate to argue for fundamental tax reform.

At Forbes, Brian Domitrovic explains the economic context of Romney’s work at Bain Capital.

On The Kudlow Report, James Pethokoukis discusses Gingrich’s rise in the polls:

At RCM, John Tamny suggests Ben Bernanke was right in 2006 for wanting the Federal Reserve to let the mortgage market unwind.

In The WSJ, Holman Jenkins examines the causes of the 2008-09 financial meltdown, but omits Robert Mundell’s claim that the rapid 30% dollar appreciation in summer 2008 was the central factor.

On The Daily Beast, David Frum defends the 15% capital gains rate.

Futureofcapitalism rebuts The NYT on the capital gains tax rate.

On The Mike Rosen Show, Cato’s Alan Reynolds critiques Ronald McKinnon’s call for a wealth tax.

At IBD, Walter Williams notes the inequality of wealth creation as opposed to income.

From Fox News, David Pietrusza cites Calvin Coolidge on marginal tax rates:

If we had a tax whereby on the first working day the Government took 5 per cent of your wages, on the second day 10 per cent, on the third day 20 per cent, on the fourth day 30 per cent, on the fifth day 50 per cent, and on the sixth day 60 per cent, how many of you would continue to work on the last two days of the week?

From Alhambra Partner, Joe Calhoun worries at bullish sentiments.

At TGSN, Ralph Benko argues mismanagement of the gold standard led to the Great Depression.

On NRO, Jim Manzi considers how to cut marginal tax rates on the poor.

In The WSJ, actor Rick Moranis satirizes modern economic theories.

Tuesday items: Kudlow, Luskin and Moore on Romney; Boaz and DeMint on Paul; IBD says the Fed is readying QE3.

noreply@blogger.com (Sean R) — Wed, 18 Jan 2012 04:19:00 +0000

From NRO, Larry Kudlow suggests Mitt Romney should downsize the US government to turnaround America, Inc.

In The WSJ, Don Luskin advises Romney to defend his work at Bain.

From Cato, David Boaz defends US Rep. Ron Paul’s (TX) analysis of the financial crisis.

On The Kudlow Report, Stephen Moore discusses Romney's taxes:

In The Washington Post, Bill Knapp suggests the middle class is not stagnating.

IBD reports the Federal Reserve is preparing QE3.

The NY Sun opposes release of Fed transcripts.

In Forbes, Charles Kadlec argues declining freedom is the root of the economy’s problems.

At Powerline, Steven Hayward advocates a Laffer Curve for regulation.

On CNN, Sen. Jim DeMint (SC) applauds Ron Paul’s Federal Reserve criticism:

On Bloomberg, Virginia Postrel pans the new Margaret Thatcher movie.

In The Washington Times, Richard Rahn compares the economies of Cayman and Belize.

Week in review: Woodhill and Tamny on Romney; Freeman and Tamny on Santorum; Laffer on Buffett.

noreply@blogger.com (Sean R) — Tue, 17 Jan 2012 04:11:00 +0000

Apologies for the gap in service last week. Was in Austin, TX for The Laffer Center’s winter meeting featuring interesting talks from Art Laffer, Brian Domitrovic, Steve Moore, John Chapman, and Dan Mitchell, plus terrific comments from Louis Woodhill.
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In Forbes, Louis Woodhill suggests Mitt Romney doesn’t understand growth, starting with his neglect of the dollar.

At RCM, John Tamny chides Romney’s Bain critics.

In The WSJ, James Freeman profiles Rick Santorum as a “supply-sider for the working man.”

Also at RCM, Tamny critiques Santorum’s plan to revive US manufacturing.

In The WSJ, Art Laffer rebuts the Buffett strategy to tax the rich.

PBS’s Newshour challenges the Laffer Curve:

From Alhambra Partners, John Chapman analyzes current monetary policy.

At Cato Unbound, John Tamny argues gold-linked money would restore the economy.

The NY Sun applauds former Malaysian Prime Minister Mahathir Mohamad for supporting the gold standard.

At TGSN, Lew Lehrman discusses the origins of the gold-linked dollar:

TGSN recounts the Founders’ views on sound money.

In USA Today, US Rep. Ron Paul (TX) critiques the Federal Reserve.

At The Street, Steve Forbes argues for gold-linked money.

In Forbes, Peter Ferrara notes the extraordinarily slow economic recovery.

On Fox Business, Steve Forbes sounds bullish on the economy:

From Forbes, Charles Kadlec suggests lower government spending will lead to more jobs.

On NRO, Larry Kudlow urges Romney to take up tax reform.

From Bloomberg, Ramesh Ponnuru argues supply-side economics isn’t selling with voters.

At NRO, Ponnuru suggests Romney not adopt tax reform.

On MSNBC’s Hardball, Bruce Bartlett argues the Bush era proves tax rates don’t lead to prosperity:

In The CSM, Keynesian Jared Bernstein opposes “trickle-down economics.”

Monday items: Yahoo on the rising dollar; Woodhill on the employment report; The WSJ on Santorum.

noreply@blogger.com (Sean R) — Tue, 10 Jan 2012 04:04:00 +0000

Yahoo! Finance reports the euro’s dollar price has fallen from $1.48 in May to $1.27 today.

At RCM, Louis Woodhill disputes Friday’s positive employment report.

The WSJ critiques Rick Santorum’s economic plan.

On The Kudlow Report, Steve Forbes discusses Jon Huntsman’s late surge in New Hampshire:

At Forbes, John Tamny suggests the ongoing recession is incompatible with the American identity.

On Forbes, Ralph Benko reports new political initiatives to shake up the status quo.

In The WSJ, Maurice Greenberg argues for a free trade pact with China.

On RCM, Brian Wesbury skewers recent economic legislation.

At The WSJ, Mary Kissel discusses Mitt Romney’s Bain Capital years:

In The WSJ, Ronald McKinnon makes the conservative case for a wealth tax:

In order to have a fairer tax system, we should implement a new federal wealth tax in addition to the federal income tax. Unlike the current income tax, the wealth tax would not rely on how income is defined. Rather, it would require that households list all their domestic and foreign assets on, say, Dec. 31 in the relevant tax year. With a large exemption of $3 million that effectively excludes more than 95% of the population, a moderate flat tax—say 3%, on wealth so defined—could then be imposed.

On TGSN, Ralph Benko explains Winston Churchill’s error in re-establishing the British gold standard.

Also at TGSN, Benko quotes a very smart monetary analysis from Charlie Chaplin.

Weekend edition: Ferrara on Romney's plan; Gingrich on sound money; Hassett on Santorum's tax plan.

noreply@blogger.com (Sean R) — Mon, 09 Jan 2012 04:29:00 +0000

From Forbes, Peter Ferrara suggests Mitt Romney’s economics plan is too timid to win.

In his column, Larry Kudlow advocates a bolder Republican growth message.

The Manchester Union-Leader praises Newt Gingrich’s economic plan.

On C-SPAN, Gingrich cites sound money (at 32 and 35 minutes) at the top of his list of economic priorities, and on Larry Kudlow's radio show cites the dollar again (at 22 minutes).

Yahoo News notes Gingrich’s ability to learn quickly from audiences on the stump.

At NRO, AEI’s Kevin Hassett critiques Rick Santorum’s tax plan.

On The Kudlow Report, Stephen Moore discusses the latest unemployment numbers:

The WSJ analyzes the lower workforce participation rate.

At The American, James Pethokoukis examines the latest unemployment numbers.

The NY Sun dismisses the Fed’s latest initiative to publish the interest rate forecasts of its individual members.

In The NYT, Eammon Fingelton argues Japan is in pretty good shape, and notes its large current account surplus despite a massive rise in the yen’s foreign exchange value.

At The Atlantic, Megan McArdle notes that when loss of benefits and tax credits are accounted for, America’s working poor pays the highest marginal tax rates.

In The NYT Magazine, Adam Davidson explains that Europe’s larger problem is its weak growth rates for decades.

At The WSJ, Cato’s Dan Griswold argues Republicans have missed the economic benefits of immigration:

From New World Economics, Nathan Lewis discusses gold standard operating mechanisms.

The NYT reports US manufacturing’s surprising strength.

In The NYT, Bruce Bartlett examines the federal debt.

Also in The Times, Paul Krugman correctly argues that government debt is irrelevant with faster economic growth but ruins it by suggesting spending stimulus will lead to higher growth.

Weekend edition: Ferrara on Romney's plan; Hassett on Santorum's plan; The Union-Leader on Gingrich's plan.

noreply@blogger.com (Sean R) — Mon, 09 Jan 2012 03:51:00 +0000

From Forbes, Peter Ferrara suggests Mitt Romney’s economics plan is too timid to win.

In his column, Larry Kudlow advocates a bolder Republican growth message.

The Manchester Union-Leader praises Newt Gingrich’s economic plan.

Yahoo News notes Gingrich’s ability to learn quickly from audiences on the stump.

At NRO, AEI’s Kevin Hassett critiques Rick Santorum’s tax plan.

On The Kudlow Report, Stephen Moore discusses the latest unemployment numbers:

The WSJ analyzes the lower workforce participation rate.

At The American, James Pethokoukis examines the latest unemployment numbers.

The NY Sun dismisses the Fed’s latest initiative to publish the interest rate forecasts of its individual members.

In The NYT, Eammon Fingelton argues Japan is in pretty good shape, and notes its large current account surplus despite a massive rise in the yen’s foreign exchange value.

At The Atlantic, Megan McArdle notes that when loss of benefits and tax credits are accounted for, America’s working poor pays the highest marginal tax rates.

In The NYT Magazine, Adam Davidson explains that Europe’s larger problem is its weak growth rates for decades.

At The WSJ, Cato’s Dan Griswold argues Republicans have missed the economic benefits of immigration:

From New World Economics, Nathan Lewis discusses gold standard operating mechanisms.

The NYT reports US manufacturing’s surprising strength.

In The NYT, Bruce Bartlett examines the federal debt.

Also in The Times, Paul Krugman correctly argues that government debt is irrelevant with faster economic growth but ruins it by suggesting spending stimulus will lead to higher growth.

Thursday summary: Domitrovic on Gingrich, Hoffmeister and Pethokoukis on Romney; Mitchell on the VAT tax.

noreply@blogger.com (Sean R) — Fri, 06 Jan 2012 05:10:00 +0000

From RCM, Brian Domitrovic applauds Newt Gingrich’s supply-side agenda.

On Forbes, Paul Hoffmeister argues Mitt Romney can’t solidify the GOP base without adopting a supply-side agenda.

At The American, James Pethokoukis defends Romney’s pro-growth credentials.

On CNBC, a panel debates Romney vs. Santorum:

In The WSJ, Stephen Moore wonders if Rick Perry can make a comeback.

At Forbes, Louis Woodhill analyzes how the various candidates’ will fix the economy.

In The WSJ, Dan Mitchell critiques Romney’s support for a Value Added Tax.

At RCM, John Tamny debunks budget deficit claims.

On Kudlow, James Pethokoukis discusses rumors the Obama Administration will bail out mortgage holders:

In The American Spectator, Lew Lehrman links the budget deficit to the paper dollar.

The Weekly Standard reports Bill Kristol and Sen. Rand Paul (KY) discussing a gold commission.

From YouTube, Louis Woodhill provides an interesting discussion of money, taxes and growth:

From First Trust, Brian Wesbury acknowledges excessive optimism about 2011 economic growth.

The NYT reports US income mobility is worse than in Western Europe and Canada.

Tuesday items: Kadlec on Romney's monetary vulnerability; Benko and Blom on gold and the GOP; Ferrra on stable money.

noreply@blogger.com (Sean R) — Wed, 04 Jan 2012 05:06:00 +0000

From Forbes, Charles Kadlec argues Mitt Romney’s China currency position is his Achilles Heel.

In Roll Call, Ralph Benko and Andresen Blom argue support for the gold standard will move votes in the GOP primary.

At Forbes, Peter Ferrara pens a terrific defense of a sound and stable dollar.

On The Kudlow Report, Larry discusses Newt Gingrich with a New Hampshire Union-Leader editor:

At The American, James Pethokoukis cites this blog in his analysis of the future of supply-side economics (thanks James).

In The Washington Times, Richard Rahn suggests federal policy has pushed initial public offerings out of America.

From last week, Larry Kudlow covers Art Laffer’s endorsement of Gingrich.

At First Trust, Brian Wesbury sees more good than bad in the 2012 economy.

In The WSJ, Andy Kessler notes the rise of mass market luxury goods.

From last week on Kudlow, Steve Forbes and James Pethokoukis discuss the GOP tax plans:

In Forbes, Nathan Lewis imagines a healthier financial system.

From The Tribune (PK), Zain Raza analyzes the negative impact moving from the gold standard to the dollar standard on Pakistan (h/t: TGSN).

Holiday week round up: Gingrich adopts a strong supply-side agenda and Laffer endorses; Ferrara on the President's Osawatomie, KS speech; Domitrovic on the Fed's third mandate.

noreply@blogger.com (Sean R) — Tue, 03 Jan 2012 03:03:00 +0000

From The WSJ, Newt Gingrich outlines his supply-side agenda including monetary reform:

Second, the dollar needs to be stabilized by establishing a price rule for the Federal Reserve to follow in its conduct of monetary policy. This will help stabilize international exchange rates, resolve the ongoing cycles of global financial crises and investment bubbles, short-circuit the run-up in gas and food prices, and unlock the frozen credit system.

On The Kudlow Report, Gingrich discusses his plan:

Human Events reports Art Laffer and Michael Reagan endorsing Newt Gingrich’s supply-side plan.

At Forbes, Steve Forbes argues President Obama will be a one-term president.

From Forbes, Peter Ferrara critiques the President’s attack on supply-side economics.

On Fox News, Laffer discusses his support for Gingrich:

From Forbes, Brian Domitrovic suggests the Federal Reserve has a third, secret mandate to fund the government’s debt.

On CNBC, John Carney cites Jude Wanniski’s Two-Santa Theory to criticize Republican handling of the payroll tax holiday.

At IBD, Walter Williams rebuts China bashers.

From Human Events, Larry Kudlow profiles US Rep. Paul Ryan (WI) as man of the year.

At Forbes, Bret Swanson critiques the Obama Administration’s focus on increasing consumption.

On Kudlow, Steve Forbes discusses the GOP race:

From TGSN, Larry White explains how to transition to a gold-linked dollar.

In The WSJ, Robert Guest outlines the positive contribution high-skill immigrants make to the US economy.

On Forbes, Louis Woodhill suggests the payroll tax holiday is bad for the economy.

At TGSN, Ralph Benko quotes Isabel Patterson on Isaac Newton’s role in defining the British pound as a weight of gold.

On The Larry Parks Show, The American Principles Project’s Sean Feiler discusses the weak dollar’s role in workers’ declining wages.

From Bloomberg, Robert Mundell applauds the ECB’s recent monetary expansion:

The WSJ profiles Gov. Romney, noting possible support for a Value Added Tax.

At TGSN, Ralph Benko wishes the Federal Reserve happy birthday.

In The WSJ, Stanford’s John Taylor argues for tax rate stability.

Art Laffer and the Founding of Supply-Side Economics.

noreply@blogger.com (Sean R) — Fri, 30 Dec 2011 02:44:00 +0000

In light of supply-side economics hero Arthur Laffer’s Wednesday endorsement of Newt Gingrich’s economic plan, it’s worth recalling Laffer's history remaking American politics and world economics.

Art Laffer rose to national fame in the early 1970s. As 30-year-old chief economist at the Office of Management and Budget, he became a source for political reporter Jude Wanniski of the now-defunct National Observer. When Wanniski was tapped to analyze President Nixon’s August 1971 decision to end the dollar’s international convertibility to gold, Laffer, who opposed the gold move, helped Wanniski to understand the magnitude of Nixon’s action, which severed the dollar’s 150-year gold link and led to a precipitous drop in the dollar. He also recommended Wanniski speak with Canadian Robert Mundell.

By 1971, Mundell was a towering figure in academic economics, a major figure at the University of Chicago (editor of The Journal of Political Economy), and Laffer had been his colleague. When Wanniski met Laffer, the nascent supply-side revolution had already been cooking in top academic circles and needed only conveyance out of that fishbowl into politics and the public mind should conditions warrant it – and by the 1970s, did they ever.

As a result of his tutelage under Laffer and Mundell, Wanniski, by then at The Wall Street Journal editorial page under Robert Bartley, was far ahead of the curve in analyzing rising inflation and the soaring oil price: “Because of Laffer's occasional visits to New York and the success of his private forecasts, which I kept reminding the others on the [WSJ] staff were highly accurate, we were not taken in by the fourfold increase in the price of oil in 1973. The rest of the economic universe thought the Arabs could do this because the world was running out of oil. Laffer pointed out that Mundell... had predicted that in January 1972 the price would soon rise dramatically and be followed by price increases in all other commodities – this, because of the rise in the gold price.”

In 1974, Mundell and Laffer foresaw recession alongside rising monetary inflation – an impossible combination under the era’s reining Keynesian dogma – and began to argue for a US tax cut. Wanniski reported Mundell and Laffer’s view in The WSJ, “It’s Time to Cut Taxes.”
Around the same time, at Wanniski’s invitation, Laffer famously lunched with Ford Administration officials Don Rumsfeld and Dick Cheney to discuss ideas to boost the economy. While it is disputed whether Laffer drew his soon-to-be-famous curve on a napkin at that meeting, his argument was arresting: high marginal tax rates could reduce economic output and thereby reduce tax revenues. At a certain point on the curve, a lower tax rate would produce equal or even greater government revenue.

Wanniski summarized the insight:

In studying public finance, there is nothing more important than an appreciation of the Laffer Curve. Nothing. Empires have been built on the wisdom of a few men who understood the law of diminishing returns as it applies to tax policy. Caesar Augustus understood. Napoleon understood. The architects of the Byzantine Empire understood. So did the Founding Fathers of the United States. The temporary, but sharp decline of the U.S. economy in the 1970s was the result of the failure of our political leaders to realize the law of diminishing returns was eroding the economy in a new and different way. The tax rates themselves were constant, but because of the inflation that began to take hold in 1967 when the U.S. commitment to a dollar/gold standard began to waver, real rates of taxation were rising and had passed the point of diminishing returns. We were inflating our way up the progressive tax schedules of the income-tax code.

Moreover, Laffer explained this idea was not original to him, having been expressed throughout history in various formulations. For example, Ibn Khaldun, the 14th century Muslim philosopher, wrote in his work The Muqaddimah: "It should be known that at the beginning of the dynasty, taxation yields a large revenue from small assessments. At the end of the dynasty, taxation yields a small revenue from large assessments."

In 1975 in Irving Kristol’s The Public Interest, Wanniski produced the first long-form enunciation of the tax rate cut/sound money formula, “The Mundell-Laffer Hypothesis,” later rechristened supply-side economics by Wanniski after Nixon economist Herb Stein’s scoffing dismissal of “supply-side fiscalists.” With the US moving deeper into stagflation and conventional economics seemingly unable to respond effectively, the article struck a nerve. It circulated widely among Republican intellectuals and contributed to the conversions of US Rep. Jack Kemp (R-NY) and eventually staff close to former California Governor Ronald Reagan. Wanniski continued to expound Laffer’s views at The Wall Street Journal, and in 1978 delved deeper into “Taxes, Revenues, and the ‘Laffer Curve’” in The Public Interest.

Laffer’s role was evident in two seminal tax policy debates that same year. With Laffer’s endorsement, California voters passed Proposition 13 to reduce property tax rates and restrict the state assembly’s ability to raise future taxes. Also in 1978, US Rep. William Steiger (R-WI) proposed cutting the capital gains tax rate down to 25% for individuals and corporations. Steiger’s argument came straight from Laffer – that increased economic growth would offset the lower tax rates, and the measure passed under a Democratic Congress. Steiger’s revenue predictions were confirmed as capital gains revenues remained higher after the rate cut than before, even through the deep recession of 1981-82.

In 1978, Kemp met with Reagan to discuss economics and succeeded in a day of conversation in convincing Reagan, who grasped the economics immediately, to focus on lower tax rates and growth rather than balanced budgets. Laffer was a key Reagan advisor during the 1980 campaign, and Reagan ran on the Kemp-Roth plan to cut income tax rates across the board by 30%
The rest is history. Combined with Reagan’s commitment to a stable dollar, Kemp’s tax cuts – phased in from 1981-83 with bipartisan support – helped launch one of the great US economic booms, arguably lasting from 1982-2007. The top tax rate was lowered from 70% to 50%, and then down to 28% in 1986, again with bipartisan support. Twenty million new jobs were created, the Dow Jones Industrial Average soared, interest rates plummeted and the inflation rate dropped from double digits to below 3%.

Since the 1980s, the top income tax rate has been raised twice and cut once, settling at 35% for the last decade. Income tax rate increases have been offset by cuts in the capital gains tax rate, now at 15%. More than 30 nations have adopted flat tax systems, including, ironically, most of the former Soviet bloc nations, and several other countries are considering them today. Recent discussions of lowering the US corporate tax rate have included bipartisan recognition that lower rates could bring in similar levels of revenue. While in the 1970s many developed nations had top tax rates well above 70%, today, most nations keep tax rates below 50%.

In short, Art Laffer is a world historical figure who has helped lead the restoration of classical economics’ focus on production incentives. That his arguments about tax rates’ incentive effects have been accepted in broad terms today among economists of all political stripes is testimony to his tremendous skill as an economist and advocate.

Tuesday summary: Reynolds on unemployement benefits; Benko reports conservative support for monetary reform; Rutledge on North Korea.

noreply@blogger.com (Sean R) — Wed, 21 Dec 2011 04:08:00 +0000

From Forbes, Alan Reynolds argues shortening unemployment benefits' duration would lower unemployment and help the President’s re-election prospects.

On TGSN, Ralph Benko highlights conservative leaders’ support for sound money.

At Forbes, Charles Kadlec applauds and critiques the recent Bank of England report on Bretton Woods.

On The Kudlow Report, John Rutledge suggests North Korea may liberalize under its new leadership:

From The Washington Times, Richard Rahn rebuts Keynesian claims on government spending.

In USA Today, Mitt Romney opposes the European-style nanny state.

At The WSJ, Jason Riley notes that Romney’s 25% support is healthy for this stage of a primary contest.

In The NYT, Joe Nocera suggests GSEs were not responsible for the real estate bubble.

From Alhambra Partners, Joseph Calhoun analyzes the economies of Europe, Asia and the US.

On Fox, Steve Forbes debates EPA regulations:

In The Washington Post, Charles Lane challenges the President’s income inequality claims.

From The NYT, Bruce Bartlett argues cutting the corporate tax rate won’t improve the economy.

At COAL, Paul Krugman wonders if China’s real estate bubble is bursting.

Monday items: Kudlow on the GOP debate; Reynolds on tax rates; Benko on support for gold.

noreply@blogger.com (Sean R) — Tue, 20 Dec 2011 04:19:00 +0000

From NRO, Larry Kudlow suggests Gingrich and Romney blew the last debate by not focusing on pro-growth ideas.

In US News, Alan Reynolds explains that the rich pay more with lower tax rates.

At Forbes, Ralph Benko chronicles the rising support for a gold-linked dollar.

On The Kudlow Report, Stephen Moore discusses the GOP campaign:

From Forbes, Nathan Lewis argues classical economics offers proactive solutions to recession and unemployment.

In The WSJ, David Malpass advocates tighter restrictions on government spending and debt.

On Newsmax, Jeff Bell calls for the gold standard.

From TGSN, Lew Lehrman discusses the GOP candidates and monetary policy:

At COAL, Paul Krugman mocks the predictions of inflation hawks.

Also on COAL, Krugman counters claims that government data underestimate inflation.

Thursday items: Malpass on the rising dollar; Shlaes on austerity; Forbes on NR's opposition to Newt.

noreply@blogger.com (Sean R) — Fri, 16 Dec 2011 04:04:00 +0000

From Forbes, Chris Barth reports David Malpass argues the dollar should rise due to tighter money, not the falling euro.

In Bloomberg, Amity Shlaes challenges Paul Krugman on fiscal austerity.

A reader comments:
Amity Schlaes pens an austerity-can-lead-to-growth op-ed, dismissing Paul Krugman's call for more Keynesian spending, but commits a startling error:

...There is evidence that austerity did lead to growth in the past, and that it did not cause fascism. These examples may be less known, but they suggest that austerity can bring recovery faster than spending can.

A strong example in U.S. history is the recession of the early 1920s. Responding to a downturn, the federal government didn't spend; it cut itself in half. Recovery followed so rapidly few people even remember that recession.

Brian Domitrovic has written how there was virtual consensus between Presidents Wilson's and Harding's money men on reducing top marginal rates before the election, so how could Shlaes forget Mellon’s tax cutting agenda that kicked off the Roaring Twenties? The Revenue Act of 1921 brought the top marginal tax rate down to 58% in 1922 from 73%, and with subsequent reductions, Mellon was able to get that top tax rate down to 25% by 1925. The austerity of the 1920s did not take place without efforts to foster economic growth. In this, Shlaes was sloppy.

On NRO, Larry Kudlow reports Senate Minority Leader Mitch McConnell (KY) pushing for the Keystone Pipeline in exchange for the payroll tax cut.

On The Kudlow Report, Steve Forbes discusses National Review’s editorial opposing Newt Gingrich:

From Forbes, Louis Woodhill argues pro-growth policies explain Gingrich’s rise.

At The American, James Pethokoukis suggests Gingrich’s Iowa lead is softening.

In The American Spectator, Ben Stein predicts President Gingrich and Vice President Huntsman.

At The WSJ, Dan Henninger portrays Gingrich as Mitt Romney’s sparring partner, toughening the former governor up to debate President Obama.

On NRO, Elise Jordan sees Jon Huntsman failing to capitalize on recent opportunities.

At Forbes, Jerry Bowyer highlights the role of interest rates to functional economic and financial systems.

From First Trust, Brian Wesbury predicts unemployment will be down to 8% by Election Day.

On The WSJ, Steve Cortes argues the Chinese economic model won’t work in the long run:

In The WSJ, conservative Keynesian Martin Feldstein pans the Eurozone economic deal.

On C-SPAN, PIIE’s C. Fred Bergsten – Keynesian and key intellectual driver of the 1970s dollar devaluation and subsequent Great Inflation – argues more American jobs will come from rebalancing world trade by lowering the dollar’s exchange rate to a competitive level (around minute 13).

Wednesday round up: Stoll, Bolduc and Costa on Gingrich; Jenkins on Romney; CNN reports the euro falling below $1.30.

noreply@blogger.com (Sean R) — Thu, 15 Dec 2011 04:37:00 +0000

From The NY Sun, Ira Stoll suggests Newt Gingrich has surged in part because his tax policies are superior to Mitt Romney’s.

In The WSJ, Holman Jenkins Jr. argues the nation needs a problem solver like Romney.

At NRO, Brian Bolduc reports that Gingrich saw supply-side economics' political potential early, but wasn’t deeply interested in the economic details.

On The Kudlow Report, Robert Costa discusses US Rep. Paul Ryan's (WI) critique of Gingrich for not edorsing unpopular entitlement reforms:

CNN notes the euro falling below $1.30.

The WSJ highlights the rise of regulation under the current administration.

At Forbes, Bill Flax argues pending tax increases and regulation are strangling business.

In IBD, Jim Gilmore proposes interesting pro-growth ideas but omits dollar stability.

On CNBC, John Carney cites Jude Wanniski’s view that budget deficits should be considered relative to the total size of the economy.

From First Trust, Brian Wesbury and Robert Stein see the economy improving and doubt the Fed will enact QE3.

On CNN, Stephen Moore argues unemployment benefits go on too long:

At The Freeman, the late great Julian Simon supports immigration.

In The Washington Post, Charles Lane highlights conservative Keynesian Martin Feldstein’s long-standing opposition to the euro.

From the archive, Feldstein advocates dollar “competitiveness” via a lower exchange rate.

Tuesday round up: Domitrovic on Obama's economic history; Benko notes a Bank of England study; Ponnuru on the President's inequality claims.

noreply@blogger.com (Sean R) — Wed, 14 Dec 2011 04:57:00 +0000

Note to readers: Sorry for the spotty coverage the last few days. Professional and holiday obligations have interfered with regular postings. Hope to be back on track, at least until Christmas week.
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From Forbes, Prof. Brian Domitrovic fails the President in economic history.

On TGSN, Ralph Benko highlights a Bank of England study suggesting growth under Bretton-Woods was superior to the current floating currency era.

At RCM, John Tamny chides the President for critiquing company shareholders and productivity enhancing technology.

On The Kudlow Report, Sen. David Vitter (LA) debates Newt Gingrich’s flat tax proposal:

At Bloomberg, National Review’s Ramesh Ponnuru suggests voters aren’t buying the President’s inequality talk.

On NRO, Larry Kudlow rebuts the President’s anti-supply-side broadside.

From Alhambra Partners, Joe Calhoun expresses skepticism of last week’s European debt agreement.

In The National Interest, Amitai Etzioni suggests fear of China is vastly overblown.

From Pajamas Media, David Goldman argues the Egyptian economy is in terrible shape.

On The Kudlow Report, Art Laffer advocates cutting unemployment benefits:

In The NYT, Bruce Bartlett examines who exactly counts as rich.

Monday items: Kudlow, Benko and Ruddy on Newt; Mundell on a world central bank; Rago defends Romney's work at Bain.

noreply@blogger.com (Sean R) — Wed, 14 Dec 2011 04:54:00 +0000

From NRO, Larry Kudlow praises Newt Gingrich’s supply-side rhetoric and wonders if Mitt Romney will counter with a more robust fiscal package.

On The American, James Pethokoukis suggests Romney may be moving towards more tax reform.

In Forbes, Ralph Benko applauds Gingrich’s populist, progressive conservatism.

At Newsmax, Christopher Ruddy cites Gingrich’s supply-side history as proof of his conservative bona fides.

On The ASEAN Business Report, Robert Mundell advocates a world central bank, starting with a common currency for the Eurozone and US:

At The American Spectator, Ralph Reiland suggests the President’s policies threaten a repeat of the Great Depression.

From Cato, Alan Reynolds notes the payroll tax holiday heavily benefits upper income earners.

On RCM, Bill Frezza distinguishes between crony capitalists and market capitalists.

At RCM, John Tamny argues energy production jobs won’t lead to prosperity.

On The WSJ, Joe Rago defends Mitt Romney’s work at Bain Capital.

Also from The WSJ, my old boss US Rep. Ed Royce (CA) argues for reform of Sarbanes-Oxley and Dodd-Frank:

The WSJ reports progress on easing restrictions on high-skilled immigrants.

Weekend edition: Mundell on global currency; Williams and Moore on benefits for the rich; Woodhill on the unemployment report.

noreply@blogger.com (Sean R) — Wed, 14 Dec 2011 04:35:00 +0000

Thailand’s The Nation reports supply-side guru Robert Mundell arguing for a global currency.

In Forbes, Louis Woodhill debunks optimism about the latest unemployment report.

In The WSJ, Walter Williams and Stephen Moore argue for cutting government benefits to the rich, rather than raising taxes:

The much bigger fiscal drain from the wealthy is on the federal expenditure side of the budget ledger: tens of billions each year in grants, loans, subsidies, guarantees and benefits pocketed each year by wealthy Americans as individuals and firms. Any campaign to downsize big government will only succeed if the needed deep cuts in spending are deemed by voters as equitable. In an era of $1 trillion-plus deficits and a $15 trillion national debt, we would like to think that a national consensus could be reached to eliminate handouts to individuals and companies with net incomes above $1 million.

On The Kudlow Report, Stephen Moore discusses the NLRB’s decision to drop its case against Boeing:

At America Now with Andy Dean, Cato’s Alan Reynolds discusses his recent WSJ op-ed on the top 1%.

From The Atlas Sound Money Project, Nicolas Cachanosky defends the gold standard.

At The Council on Foreign Relations, Benn Steil refutes Brad Delong’s claim that the ECB will print its way out of the EU’s debt crisis.

On Activist Post, David Redick proposes gold to save the euro (h/t: Ralph Benko).

In Forbes, Ken Rapoza quotes Bretton Woods Research’s Vlad Signorelli on China’s lower inflation and economic weakness.

The WSJ notes the weakening yuan.

On Fox Business, Steve Forbes discusses the European crisis and bailout possibilities:

The WSJ argues Europe won’t restore growth with higher tax rates.

At Cato Unbound, a monetarist, Keynesian, and an Austrian debate whether the economy is caught in a liquidity trap.

Wednesday items: The Wash Post reports the President's assault on SSE; Ferrara responds; Pethokoukis on inequality.

noreply@blogger.com (Sean R) — Thu, 08 Dec 2011 04:17:00 +0000

The Washington Post reports the President claiming supply-side economics has never worked.

In The American Spectator, Peter Ferrara says the President is pitting the takers against the makers.

At Forbes, Bill Frezza rebuts Robert Reich.

On The Kudlow Report, a panel discusses the Gingrich vs. Romney race:

At The American, Alex Brill explains that the payroll tax holiday is bad policy.

The WSJ notes the tax increase support from Governors Cuomo and Brown.

From The American, Bret Swanson argues the FCC restrictions of the AT&T-Mobile wireless merger will damage jobs and innovation.

The WSJ notes possible changes in the Basel III rules.

On Kudlow, James Pethokoukis discusses income inequality:

At Forbes, Brian Domitrovic chides the press for its coverage of Herman Cain.