30 Years Later and America Again Needs Leaders Who Can Create Another Economic Recovery Tax Act

Jack F. KempBookmark and Share     Today marks the thirtieth anniversary of Ronald Reagan’s signing of the Kemp-Roth Tax Cut Act of 1981. The bill’s official legislative name was the Economic Recovery Tax Act. The legislation was authored by Jack Kemp in conjunction with Senator William Roth. Both men were co-sponsors of the legislation but Jack Kemp was the main architect and  the man  credited for  “selling Reaganomics to Ronald Reagan.”    Then Congressman Jack Kemp, had introduced the Economic Recovery Tax Act in the House, several times before  the 1981 legislative session, but Democrat Congressional leaders and a Democrat President failed to move on it.

But once Reagan became President, he took the initiative to act on it and successfully pushed The Kemp-Roth bill through Congress. Were it not for Reagan, the economy-saving legislative initiative may never have passed, but were it not for Jack Kemp, it may never have existed in a way that was quite as strong and definitive as it wound up being.

The Kemp-Roth Tax Cut amended the Internal Revenue Code of 1954 and was responsible for encouraging the economic growth through:

  • The reduction of individual tax rates;
  • By expensing depreciable property; and
  • Creating incentives for savings and other small businesses.

The main features of the Act were responsible for:

  • Reducing the tax rates by 25% over three years;
  • Accelerating depreciation deductions;
  • Indexing of individual income tax parameters;
  • Excluding income of two earner married couple by 10 %;
  • Reducing windfall profit taxes; and
  • And expanding provisions for employees stock ownership plans.

Once enacted, the days of malaise that existed under the old tax code during the Carter years, turned into the days of rejuvenation. It took a while to actually turn the economy around but it didn’t take as long as many predicted and once the economy did turn the corner, it took off.  Once it began in November of 1982,  and lasted 92 months without a recession until July of 1990, and set a  record for the longest peacetime expansion ever.  This histroy of so-called Reaganomics greatly contrats the Obamanomics of today.  While the Reagan recovery averaged 7.1% economic growth during  the first seven quarters, the Obama recovery has only  produced less than half that at 2.8%, and to add insult to injury, the last quarter came in at at a dismal 1.8%. growth  After seven quarters of the Reagan recovery, unemployment had fallen 3.3 percentage points from its peak to 7.5%, with only 18% unemployed long-term for 27 weeks or more.  After seven quarters of the Obama recovery, unemployment has fallen only 1.3 percentage points from its peak, with a postwar record 45% long-term unemployed.

This makes it quite clear that one of the two policiers did better than the other

The Kemp-Roth based plan that created Reaganomics  amounted to one of the most successful economic experiments  in history.  The recovery rstarted in officialyl officiaslly statreted in November 1982,  when the tax increases of the 1990 budget deal killed it.  What is so striking about Obamanomics is how  so utterly antithetica to the Kemp-Roth plan  pursues the opposite of every one of these planks of Reaganomics.  Instead of reducing tax rates, President Obama is committed to raising the top tax rates of virtually every major federal tax.  As already enacted into current law, in 2013 the top two income tax rates will rise by nearly 20%, counting as well Obama’s proposed deduction phase-outs.

As a result, while the Reagan recovery averaged 7.1% economic growth over the first seven quarters, the Obama recovery has produced less than half that at 2.8%, with the last quarter at a dismal 1.8%.  After seven quarters of the Reagan recovery, unemployment had fallen 3.3 percentage points from its peak to 7.5%, with only 18% unemployed long-term for 27 weeks or more.  After seven quarters of the Obama recovery, unemployment has fallen only 1.3 percentage points from its peak, with a postwar record 45% long-term unemployed.

You may be asking yourself what this topic has to do with a site that is covering the 2012 presidential election.  If  so, the answer is simple.  In the 2012 presidential election, the G.O.P. needs to emerge with a nominee who embodies the thinking, persistence,  and courage of  Jack Kemp. 

While Kemp was never a President,  in addition to being an accomplished Congressman, he was a successful Secretary of Housing and Urban Development under President George H. W. Bush.  His most notable accomplishment in that position was his  much touted Urban Enterprise Zone policy which encouraged development in blighted neighborhoods through tax and regulatory relief to entrepreneurs and investors who launched businesses in those blighted areas. This in turn made great strides in bringing back communities that had previously been written off.   

In its entirety, all of Jack Kemp’s work had a positive influence on  our nation that was as great as any President and it all stemmed from his sense of conviction to conservative fiscal policies, his faith in the individual more than government, and his belief that the free market was the true engine of our economy.  And it is that type of thinking that our nation needs more of and now more than ever.

Today our nation is being led by a man who is most likely well intentioned but assuredly misguided.   He and his Party, the American liberal party,  truly believe that government is the economic engine that creates jobs, makes products, and produces sales.  They do not grasp the fact that anything the government does costs, more than it makes and that what it makes is not their money but our money……the taxpayers money.  They do not grasp the fact that we can not continue to spend more than we have and take more from the people than make.  We can not keep on taking from Peter to go give to Paul. In time Peter will go broke and soon after, Paul will too.  Many of us realize that that time is already upon us.  Now we just need a leader like Jack Kemp who understands that and a President like Ronald Reagan who can get government to adopts that thinking.

Jack Kemp is no longer with us , but if he was I am sure he would repeat the following words that he once spoke

“Every time in this century we’ve lowered the tax rates across the board, on employment, on saving, investment and risk-taking in this economy, revenues went up, not down.”

And he would be right.

We need more leaders like Jack Kemp today, but until one is found we have the Kemp legacy to help guide us, and hopefully we will soon have leaders who will see that light that Jack Kemp, William Roth, and Ronald Reagan once shed upon us with their faith in less government, less spending, less taxation, and more freedom.

Today however, on this thirtieth anniversary of the signing in to law of the 1981 Economic Recovery Tax Act (ERTA), I ask that you pay homage to Jack Kemp by visiting a Facebook page that has been dedicated to him, his life, his work, and his legacy. Please visit the Jack F. Kemp Facebook page and press the “like” button. Show your appreciation for him, his leadership and his belief in people more than government, and the free market than the government bureaucracy

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Daily Tweet: Col. Allen West Takes on President Obama

Bookmark and Share The best tweet of the day comes from Congressman Allen West who in regards to the rhetoric being used byPresident Obama’s to defend hisunwillingness to appropriately confront our nation’s spending addiction and mounting national debt, tweeted; “This demagoguery must be met head on. Now is not the time for class warfare, arrogance in leadership or political incompetence in America.”

As usual, Col. West is right and thankfully he has the courage to tell it like it is and not dance around the truth!

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