Biden Launches His Tax, Spending Spree on the 40th Anniversary of Reagan’s Historic Tax Cuts

So as we’ve asked time and again, does anybody in their right mind believe that — with an economic boom, a jobs boom, a consumer boom, an inflation boom, and a stock market boom — the right fiscal policy is to spend $6 trillion more?Does anybody really believe that? Does anybody in his right mind really believe that with a $3 trillion dollar tax hike, we’re really going to tax our way into prosperity? It begs credulity. President Biden’s plunging polls show that ordinary voters have a much better grip on reality than the Biden administration.Among many fiscal sins, President Biden is launching the first major tax hike on capital in 50 years. It will be taxing top income earners, capital gains, dividends, corporations, small businesses, and estates. In other words, with his so-called “tax the rich” income redistribution progressive left policies, Mr. Biden is hell-bent in assaulting the geese that lay the golden eggs.We’ve seen nothing like this in a half-century. So what we’ll have is more and more spending with monetary support from the Federal Reserve to boost demand, along with higher tax rates on investments and success to choke off supply.Now, I don’t know if today’s inflation problem is temporary or permanent. Right now, it is what it is. And it’s not good. In any event, I can guarantee that if Mr. Biden’s high-tax, high-spend, high-regulate policies are legislated in reconciliation today, inflation will become permanent and permanently worse.The Bidens are determined to reverse President Trump’s policies of lower-taxes, minimal regulations, and energy independence. Parenthetically, Mr. Trump did not beg OPEC to produce more oil. Instead, he opened the door to American oil production with more than ample energy supplies at low cost.The results of Mr. Trump’s policies were record low unemployment and low inflation, with lower poverty, reduced inequality, and a steady king dollar. Which brings me to the 40th anniversary of President Reagan’s revolutionary tax cuts, which dropped the income tax rate from to 28% from 70%. He also was a minimal regulator, including the decontrol of oil prices, which led to a huge drop. So did gold. And silver. And inflation.Working with the Federal Reserve chairman at the time, Paul Volcker, the combined economic policy was basically low-taxes and a steady, strong, reliable king dollar. Tax cuts rejuvenated the economy. King dollar vanquished inflation. The theoretical roots of this new paradigm traced back to what became known as the Laffer-Mundell hypothesis.From that came the Laffer Curve — also know as lower tax rates, which generated higher tax revenues through faster economic growth and less tax avoidance. If all of this sounds like the direct opposite of President Biden’s policies, you would be right.According to Art Laffer and Steve Moore, the economy grew at a 7.3% annual rate between 1981 and 1989. Tax revenues almost doubled. Under Reagan, the share of taxes paid by the richest one percent rose to 26% from 19% under Reagan and would later grow to 40-percent.The stock market stood at roughly 1,000. It rose 12-fold under Reagan. Today, the Dow Jones is well above 35,000, which is roughly a 35-fold increase. Basically, Reagan’s tax cuts launched a three decade-long prosperity cycle. Between late 1982 and 2007, a 25-year period, the economy grew at a 3.4% an annual rate.It wasn’t until the financial crisis of 2008 and 2009 that the cycle was broken. That, by the way, was caused by regulatory financial and monetary mistakes. Reagan’s low tax regime actually remained in place, even after the recovery-weakening over-regulation by President Obama.President Trump restored prosperity by slashing taxes and regulations, thereby successfully following the Reagan playbook. It underscores that in economic terms, there’s a right way and a wrong way. History, with real-world facts, is our guide.There’s a way to make America prosperous and a way to not make it prosperous. There’s a way to make America the world’s leader or not the leader. I prefer American leadership using American ideals. I like seeing this country remain the great city on the hill.________From Mr. Kudlow’s broadcast on Fox News. This column was updated to improve the headline that ran in the bulldog.

Biden Launches His Tax, Spending Spree on the 40th Anniversary of Reagan’s Historic Tax Cuts

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