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Jeremy Pitcoff CSA Member Smithtown Republican Committeeman |
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Reagan, Kennedy & Supply-Side Economics
September 3, 2010
Proponents call it "supply-side economics", detractors, the "trickle-down effect". Semantics aside, this economic philosophy is the theory most consistent with America's founding tenets of freedom of commerce, individual autonomy and noninvasive government. Supply-side economics has been effectively utilized in the past, under the stewardship of esteemed leaders such as Alexander Hamilton, John F. Kennedy and Ronald Reagan, in order to rescue the American economy from the brink of fiscal collapse. It is a theory rooted more in broad national values than in economic intricacies, allowing the American people, not the American government, to set commercial policy.
Free trade, low taxes and minimal commercial regulation are the foundations of the supply-side theory. By allowing Americans, both rich and poor, to keep a fair share of what they earn, we invite capital investment which, in turn, results in economic growth. With regard to individual income taxes, the lower the rate of taxation, the more money that is available for the buyer. This excess money will naturally be utilized to purchase a product or service, to invest in an upstart company or to be saved, with interest, in a bank account. With regard to business and corporate taxes, common sense dictates that a company's profit margin serves as its driving incentive for investment, expansion and hiring. The more money the government takes, the less profit a business makes, the less profit a business makes, the less people it chooses to employ, the less people employed within a community, the less revenue that is raised through taxes. The government's typical reaction to this diminishing revenue is yet another increase in taxes, causing more businesses to contract and raise prices, therefore perpetuating a vicious cycle.
Free trade and minimal commercial regulation, each serve the purpose of creating national wealth and increasing the real GDP. The greater the number of American products allowed to be sold abroad, the more money that will circulate within our economy at home, resulting in more domestic jobs and higher national wages. The same, too, can be said with regard to allowing foreign companies to operate within our borders. These companies will naturally employ additional American workers to tend to their business affairs, encouraging competition and demand.
The less operational control the U.S. government has over the affairs of American capitalism, the better off the economy will be. Big government is inefficient and clumsy by nature, private enterprise the engine of Americanism. New York State, with the highest top marginal personal and corporate tax rates in the nation, is in dire economic straits. However, even the states with less burdensome tax policies are no longer able to thrive. This is due to nearly four years of continuous congressional attacks on the American private sector, culminating in the passage of Obama-Care and the ill-conceived financial reform bill.
America's current national debt dwarfs that of any other period in our history. We are in the midst of a trade war with Mexico as a result of union manipulations. The majority of the free world has negotiated trade agreements with Colombia and South Korea, yet America's attempts at negotiations with these nations are languishing on Capitol Hill. January will usher in the largest business tax increases in American history via the expiration of the Bush-Era tax cuts and the newest round of Obama-Care levies. These policies, in a withering economy, are akin to those of the Nixon and Hoover Administrations, and will likely share their fate - that of making a bad economy worse.
The supply-side policies of the Kennedy and Reagan Administrations are the models that Americans should be attempting to emulate. In both instances, the leadership of the Presidents and the efforts of Congress resulted in rescuing the American economy from dismal conditions, leading to historically significant periods of economic growth. This growth, in both instances, resulted in increased government revenue, irrespective of lower tax rates. Presidents Kennedy and Reagan both held strong reverence for the ingenuity of the American people, each voluntarily transferring economic power from the government to the people, subsequently concentrating their respective resources on national defense, human rights and space exploration. These were issues that Presidents Kennedy and Reagan considered to be more in line with their constitutionally granted authority.
Supply-side economics is a proven theory that has resulted in the most fiscal prosperity for the maximum number of Americans. It is based on a quintessentially American premise. When a people are in control of their own destiny, they will, by nature, endeavor to improve it. Americans are prone to utilize that freedom in order to secure prosperity for subsequent generations; it is within our nature to do so. If a government controls its economy, it necessarily controls its people. Freedom of commerce is a liberty that Americans often take for granted; supply-side economics insures this liberty by keeping the government at arm's length. If we allow our Congress to further impede upon our traditional commercial autonomy, sooner or later, supply-side economics will cease to be a viable option. Across the board tax cuts, free trade and commercial deregulation will merely be policies of the past. Countless generations of Americans will never have the opportunity to experience the prosperity that we once knew, and the American dream, as we presently know it, will serve as an historical footnote.
