Pushing for a huge, across-the-board tax cut in the final year of his life, President John F. Kennedy dismissed the idea that it would increase the debt in the long run: “By removing tax roadblocks to new jobs and new growth,” he declared, “the enactment of this measure next year will eventually more than make up in new revenue all that it will initially cost.”
When assessing the legacy of President Kennedy 50 years after his death, journalist Ira Stoll makes the case that Kennedy wasn’t what we think: The title of his new book “JFK, Conservative” says it all.
Even as late as 1980, supply-side policies could be denounced as “voodoo economics” by George H.W. Bush, but before the term was popularized Kennedy was an instinctive supply-sider. It’s important to keep in mind how unusually courageous a stance this was. The triumph of Keynesian economic theory in the immediate postwar decades was complete. It was simply taken for granted by the leadership class that the government needed to stimulate the economy with centralized spending during downturns. One adviser to Kennedy, the Keynes disciple John Kenneth Galbraith, argued as much. The waggish Kennedy simply exiled him with the post of Ambassador to India.Stoll lays out Kennedy’s fierce anti-communism, his religious devotion (he gave faith-based speeches of a kind Michele Bachmann might consider extreme today) and his advocacy for low deficits, a strong dollar, free trade, tax cuts, free enterprise and individual responsibility. If JFK were here today, he would either have to renounce most of what he stood for or join the Republican party.
Kennedy inherited a major recession (a contraction at an annualized rate of five percent in the fourth quarter of 1960) but kept domestic spending basically flat while ramping up military and overseas spending. Though he did preside over a 25 percent increase (over two years) in the federal minimum wage and launch several domestic programs beloved by liberals including food stamps and what became Medicare when it was passed in 1965, he harbored deep suspicions of the creeping influence of the state. Albert Jay Nock’s anti-New Deal book “Our Enemy, the State” was a volume JFK kept at his Boston home in the 1950s and he sometimes echoed the book in public statements. “I do not believe in a super state,” he said in a 1960 speech in which he declared himself a liberal, with heavy qualifiers that made him sound more like one of today’s conservatives. “I see no magic to tax dollars which are sent to Washington and then returned,” he continued, smartly summarizing the voodoo economics of Keynesianism. “I do not favor state compulsion when voluntary individual effort can do the job and do it well.”
Even Kennedy’s “ask what you can do for your country” line may not be as chilling an endorsement of state supremacy as it appears: longtime Democratic operative and pundit Chris Matthews believes it was simply a “hard Republican-sounding slap at the welfare state.” JFK didn’t seem to foresee what would happen to Medicare, calling it “a very modest proposal cut to meet absolutely essential needs, and with sufficient ‘deductible’ requirements to discourage any malingering or unnecessary overcrowding of our hospitals.” He also twice rejected a union proposal to reduce the work week from 40 hours to 35. He kept deficits modest (his budget shortfalls for 1961-63 were, when totalled, only slightly more than the 1959 deficit alone), maintained a strict, inflation-fighting price of $35 to the ounce of gold and, despite his gauzy rhetoric about a New Frontier, framed the Space Race as simply a new front in the Cold War: “Everything that we do really ought to be tied in to getting onto the moon and ahead of the Russians….Otherwise we shouldn’t be spending this kind of money, because I’m not that interested in space.”
Kennedy reserved the bulk of his energy for opposing communism abroad and freeing up markets at home. Pushing for “the fullest possible measure of tariff reduction,” Kennedy made a stirring appeal. In 1962 he said, “The American consumer benefits most of all from an increase in foreign trade. Imports give him a wider choice of products at competitive prices….The warnings against increased imports based upon the lower level of wages paid in other countries are not telling the whole story.” And he added that the “philosophy of the free market” was “not a partisan philosophy” but is “as old as freedom itself.” Kennedy carried on a robust disagreement with statist Sen. Al Gore Sr. about the virtues of Keynesianism: Gore later said, “I thought the real needs of our society lay in the inadequacy of health, education, transportation. These were largely in the public sector. Not the private sector.” He also warned dourly that “once taxes are cut, they are not likely to be reimposed.”
Exactly, replied Kennedy, who understood that only permanent tax cuts provide a true economic stimulus because consumers who expect their taxes to go right back up after a momentary easing tend to spend cautiously. “To increase demand and lift our economy,” he said in 1962, “the Federal Government’s most useful role is not to rush into a program of excessive increases in public expenditures, but to expand the incentives and opportunities for private expenditures….the greatest danger is a tax cut too little or too late to be effective.” Republicans, in general, considered the idea of tax cuts reckless, and in the Kennedy-Nixon debates it was the former who mused about the presumed need to increase taxes. Kennedy even framed his tax relief as a Civil Rights issue: “In 1963 he counted on his tax cut to reduce Negro unemployment,” wrote his adviser Arthur Schlesinger.
It’s almost impossible to picture a Democrat even speaking this way anymore, and yet Kennedy followed up on his beliefs with action. As his speechwriter Ted Sorensen put it, “In fiscal matters, he was extremely conservative, very cautious about the size of the budget.” He went on to say, years later that Kennedy, “never identified himself as a liberal….on fiscal matters he was more conservative than any president we’ve had since. On Nov. 22, 1963, the fateful motorcade through Dallas was headed for Fort Worth, where Kennedy planned to say these words: “by maintaining a more stable level of prices than almost any of our overseas competitors, and by cutting personal and corporate income taxes by some $11 billion, as I have proposed, [we will] assure this Nation of the longest and strongest expansion in our peacetime economic history.” Ronald Reagan couldn’t have said it better.