Mr. President, you are enjoying an extraordinary spurt of economic growth. It’s the best since Reagan. That said, it’s mostly due to the V-shaped recovery resulting from your, building on your predecessor's, vanquishing the coronavirus.
Pocket that. But … what next?
Much hand wringing, by the Donks, and pearl clutching, by the Pachyderms, is now evident. Your massive spending proposals are getting wrestled, as you likely knew they would, into a dirt nap on Capitol Hill.
Hooray! Profligate spending funded by exorbitant borrowing and punitive taxation has never, ever, yielded prosperity. So, what’s your next act?
Let’s cut through the econometric Tower of Blather and get down to what works immediately, profoundly and visibly. On June 21 we celebrate the anniversary of a rare, vivid, uncomplicated example: the German Economic Miracle, the Wirtschaftswunder. The economy of post-war (West) Germany turned from misery to prosperity … in one day.
As I so generously counseled President Trump via Newsmax in 2020:
“At the end of World War II, Germany was a bombed-out ruin. Germany was far worse off than we are today.
David Henderson, a research fellow with the Hoover Institution and editor of EconLib, points out: ‘20% of the housing stock had been destroyed; each person could expect half as much food as before the war; industrial output was just a third of its pre-war level ...’ Policymakers despaired of a German revival … Gen. Lucius Clay, administrator of American-occupied Germany, stated: ‘Herr Erhard, my advisers tell me what you have done is a terrible mistake. What do you say to that?’ Erhard replied: ‘Herr General, pay no attention to them! My advisers tell me the same thing.’ Erhard, unintimidated, wielded his power. Sizzling prosperity quickly followed.
This became celebrated as the ‘German Economic Miracle,’ the Wirtschaftswunder.
In the words of economist Henry Wallich, ‘The spirit of the country changed overnight. The gray, hungry, dead-looking figures wandering about the streets in their everlasting search for food came to life.’
As the great French economist Jacques Rueff — the architect of France's own post-war economic miracle, the "Trente Glorieuses" — observed [as recorded by Erhard himself] ‘Only an eye-witness can give an account of the sudden effect which currency reform had on the size of stocks and the wealth of goods on display. Shops filled up with goods from one day to the next; the factories began to work.
On the eve of currency reform, the Germans were aimlessly wandering about their towns in search of a few additional items of food. A day later they thought of nothing but producing them. One day apathy was mirrored on their faces while on the next a whole nation looked hopefully into the future.’”
Your turn, President Biden.
As U.S. Senator you voted in favor of the bold tax rate cuts propounded by Jack Kemp and proffered by President Reagan.
Led by Democratic Ways and means Chairman Dan Rostenkowski (D-Il), Caucus Chairman Richard Gephardt (D-Mo) and Sen. Bill Bradley (D-NJ), with your vote, we supercharged the American economy, bringing 4% real growth and, under President Bill Clinton (who, with your vote, cut the capital gains tax rate) massive federal budget surpluses.
Time for you, Mr. President, again to take the lead. Slash tax rates (across-the-board) to create what Jack Kennedy, in his last public speech called the “rising tide that lifts all the boats.”
But wait. There’s more for you to do!
August 15th will be the 50th anniversary of the Nixon Shock, wage-price controls, a 10% general tariff barrier, and, most consequentially, the “temporary” closing of the gold window. When Nixon failed to reopen the gold window America’s “rising tide” stopped lifting all the boats. The Federal Reserve Note standard causes the inequality that your base, and I, detest.
Kemp also left us the (never enacted) Gold Standard Act of 1984, crafted by Rueff’s protégé Lewis E. Lehrman and Lehrman’s own protégé, John Mueller. It was designed to undo the damage to equitable prosperity that Nixon’s closing the gold window wrought and that the closed window still wreaks.
As Winston Churchill discovered and Kemp understood, it is morally, politically and economically imperative to reopen the window so as to slightly privilege labor over capital, debtors over creditors. Easily done.
Mr. Biden, your Senate tax-rate-cut votes in the 1980s showed you to be a creative force for national prosperity.
Now, overrule your less-visionary advisers. Lead America back to those wellsprings of equitable prosperity, equitable tax rate cuts. Then, undo the last vestiges of the Nixon shock and couple your tax rate cuts with high potency currency reform, perhaps even Kemp’s Gold Standard Act of 1984.
Thus, conjure a modern American Economic Miracle of equitable prosperity, the creation of tens of millions of great jobs, setting the stage for a landslide re-election.
Ralph Benko, co-author of "The Capitalist Manifesto" and chairman and co-founder of "The Capitalist League," is the founder of The Prosperity Caucus and is an original Kemp-era member of the Supply-Side revolution that propelled the Dow from 814 to its current heights and world GDP from $11T to $88T. Read Ralph Benko's reports — More Here.
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