So how did JFK and Ronald Reagan get their famous tax cuts through congress?
It’s called, “starving the beast.”
First, this is not easy. People forget. JFK’s tax cuts were actually passed by Lyndon Johnson in 1964. After JFK’s assassination. At that point it would have been political suicide to oppose a Kennedy idea. So it was a once in a lifetime opportunity.
Nevertheless, a Democratic president was opposed by liberal Democrats and conservative Republicans who felt that you shouldn’t give a tax cut without balancing the budget. Democratic Senate leader, Al Gore, Sr. was against it. Democratic House leader, Harry Byrd opposed it.
And Ronald Reagan lowered taxes in 1981 but his famous Tax Reform Act was actually passed in 1986, after he had been re-elected as president. That’s the one that reduced income tax brackets from 14 to 3, which is what Donald Trump is trying to do.
So it is not easy. And it will be historic of Trump does it in his first year.
I once asked Ronald Reagan about his legacy, expecting him to talk about the end of the Cold War but he said that the one thing he was most proud of was his Tax Reform Act.
So if Donald Trump pulls this off, this year, it will be huuuuge. Historic.
Okay. Got it. But what did they do? How did JFK and RR actually get it passed? How can you get congress to move?
#1) Both JFK and RR hit the road on a national tour to rally support for their plan. This gave them publicity. We can see that Trump would be good at this.
#2) They mobilized their supporters to call congress and light up the switchboard.
With a systematic, targeted approach on Twitter, Trump could do this too.
#3) They gave a national televised speech.
Trump hasn’t really used this option. It may not be what it once was because the White House no longer has a television monopoly. But it was an important tool for JFK and RR.
Finally, historically, does it really work?
Absolutely. It’s called “starving the beast”. JFK came to realize that the only way you can get the government to spend less is to lower taxes and force it to spend less. Reagan came to the same conclusion and showed that with lower taxes came increased business investment, creating jobs and new taxes.
In 1981 the top income tax bracket in the USA was 71%. Reagan lowered it to 28%.
By the end of his term in office the top 1% earners in America, who had been paying for 17.9% of the annual budget, were now paying 25% of the annual budget. The government had lowered taxes but gotten more money.