The Obama Watch

Jack Kemp Warned Obama: Don’t Raise Taxes

A last open letter predicted policies would fail; Lincoln, arson attack on rich.

By 12.14.10

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"Dear Barack,

"Greetings, it's me again, giving more advice…."

It was April 17, 2008, and Jack Kemp, the one-time Buffalo Bills quarterback turned congressman, presidential candidate, Bush 41 HUD Secretary and 1996 GOP vice presidential nominee, was at it again. This time, sadly, one of his last "in print" outings before his tragic early death from cancer just over a year later, he was writing an open letter in the Wall Street Journal to then-Illinois Senator and Democratic presidential aspirant Barack Obama.

On tax cuts.

And while he was at it, in typical Kemp style, reminding his fellow Republicans about the GOP's heritage of economic growth -- their legacy from party founder Abraham Lincoln.

Kemp has been recently identified in the six-part Fox News history of the conservative movement hosted by Brit Hume, The Right, All Along: The Rise Fall & Future of Conservatism, as the most important Republican of the late 20th century who never became president. He won that label not because of his titled political positions or a personality frequently understated as "ebullient." The source of Kemp's reputation came about because of an entirely unofficial title as the godfather of what is known as "supply-side economics."

The fury from Democrats rises at what many of them see as an Obama sell-out over the Bush "tax cuts for the rich." Kemp would surely be the very first to point out that preventing a tax increase for two years is not exactly a serious pro-growth Kemp supply-side policy, to say the least. One can even say that by doing the minimal -- and that under extreme pressure from voters -- the Obama White House is looking to blame supply-side economics without actually putting supply-side policy into place.

In other words, Obama is trying to say "I did what you asked and it didn't work" if in fact there is no Reagan-Kemp style success from Obama's bow to the Bush tax rate. But of course, no taxes have been cut at all. The Bush tax "cuts" are not cuts. They are, after all these years, what Kemp might call the static status quo. There is in the Obama acceptance of the Bush tax rate no serious dealing with the principles that were the spur to real economic growth, Reagan-Kemp style. Were this, say, 1492, Obama would be the flat earth president. Willing to sail under duress to the horizon as long as he could see the last visible geographical landmark -- but no further. Why? Because Columbus or no Columbus, Reagan and Kemp or no Reagan and Kemp, science and fact be damned, Barack Obama and liberals at large still believe in the primitiveness that is the economic equivalent of believing in a flat earth.

The Kemp warning to Obama came in an article that was nominally about race. The fact of Obama's African-American heritage had become something of an issue in his tightening tussle for the Democratic presidential nomination with then-New York Senator Hillary Clinton. But a conversation on race -- or for that matter anything -- with Kemp always ended up eventually as a discussion on his passionately held belief in economic opportunity.

And so that fine April morning, Journal readers were treated to yet another Kempian pitch on supply-side economics -- this one directed personally to Senator Obama.

"In my opinion," wrote Kemp in his open letter, "people of all colors and income levels don't hate the rich. They want to get rich. They're more interested in generating wealth than they are in redistributing wealth. They want to own property, educate their children and build a nest egg that can be passed on to their heirs."

In a handful of sentences Kemp answered now-President Obama's left-wing critics who have repeatedly spent their time -- as has the President himself -- demonizing the "rich." A class warfare man Jack Kemp was decidedly not, and he was not hesitant in trying to politely tell Obama the politics of class warfare would eventually bring the country -- and the Democrats -- to grief. .

Kemp warned Obama that "you've pledged to raise income tax rates to 39.5% and capital gains to 28%, plus you want to return to a confiscatory 55% 'death tax.'" In a line that sadly rings too true today as an "I-told-you-so" moment amidst the news of a 9.8% unemployment rate and angry, desperate demands to extend unemployment compensation at Christmas, Kemp directly addressed Obama by predicting: "Your economic ideas, sincere as they are, would weaken the economy, weaken the dollar, and weaken our chances of reducing poverty and unemployment."

Jack Kemp was right.

Clearly, Kemp's message was taken to heart by the GOP and the Tea Party in the 2010 elections as well -- and the American people responded overwhelmingly. This is worth remembering as the so-called Obama-McConnell agreement meets its congressional fate this week, with Senate Democrats grudgingly signing on at the urging of not only Obama but former President Bill Clinton. The two presidents have stepped daintily if distastefully aboard the fenders of the Kemp idea after a career's worth of doing everything they could to derail the American people's access to capital, from massive health care bills to tax increases.

This while Vermont Socialist Senator Bernie Sanders attempts a filibuster, railing against the rich and wealth creators.

Kemp was a big believer in civility in politics, seeing the public arena as a clash of ideas. He was a vehement opponent of the politics of personal destruction. Perhaps the greatest tribute to his belief in civility would come the day of his funeral service in the Washington National Cathedral -- a standing-room-only affair brimming with men and women from across the political spectrum.

But civility to Kemp was not a ruse to escape confronting directly what he saw as an opponent's bad logic. Meeting an aide to then Congressman Bernie Sanders while HUD Secretary, Kemp smiled and cheerfully said: "The difference I have with Bernie is that Bernie is a bread slicer and I'm a bread baker." It was a succinct summation of both men. Indeed, now-Senator Sanders has spent his filibustering-time on the tax deal these last few days, tossing out one bread-slicing line after another. The rich, said Sanders on the Senate floor, are "making out like bandits." "When is enough enough?" he thundered of those who have the gall to believe they have a right to keep what they earn.

Obviously, Sanders simply doesn't care that, as the Heritage Foundation has noted with perhaps unfortunate accuracy: "The top 1 percent of income earners paid 40 percent of all federal income taxes in 2007, while the bottom 50 percent paid only 3 percent. More than one-third of U.S. earners paid no federal income tax at all." This gives Sanders' remarks a different meaning altogether. If 1 percent of income earners already pay 40 percent of all federal income taxes, the Sanders question recurs: "When is enough enough?" If the bottom 50 percent of all income earners paid a paltry 3 percent of taxes, and more than one third of all earners paid zero taxes -- zero taxes -- then indeed it is Sanders and his ideological allies who can accurately be said to be "making out like bandits."

All of this -- Obama's repeated castigations, the liberal hysteria in the House, the Sanders filibuster filled with the wildest of factual distortions or omissions about who is really benefitting from paying, or not paying – was exactly the starkly negative world-view that Kemp disdained as zero-sum, poverty-inducing and not a little mean spirited, pitting race against race, rural against urban, and so on throughout society.

Thus Kemp was boldly unhesitating in challenging Obama directly that day in the Wall Street Journal. Your policies will not work, he was saying, and they will cost Americans dearly.

There were others than Kemp involved in the remarkable modern supply-side story, to be sure. Economists Arthur Laffer and Robert Mundell, the latter an eventual winner of the Nobel Prize in Economics, formed the core group along with the Wall Street Journal editorial writer the late Jude Wanniski and its editorial chief Robert Bartley. But Kemp was the elected official amongst them, a young, energetic Congressman from the unlikely precincts of Buffalo, New York.

It was Kemp who sold his friend and former boss Ronald Reagan (Kemp had worked as an intern for the freshman California governor in the football off-season of 1967) on the significance of Laffer's legendary curve. (The Laffer Curve, as described here by Mr. Laffer himself, depicts "the trade-off between tax rates and tax revenues.") The curve, as Laffer (and Ronald Reagan -- who studied it while majoring in economics at Eureka College) knew, had a long history. At least as far back as the 14th century when Ibn Khaldun, a Muslim philosopher, noted in his writing of The Muqaddimah: "It should be known that at the beginning of the dynasty, taxation yields a large revenue from small assessments. At the end of the dynasty, taxation yields a small revenue from large assessments." It was also Kemp who sold the Republican National Committee on adopting supply-side as official GOP doctrine halfway through Jimmy Carter's economically disastrous White House term, a term begun with the so-called "stimulus" of a fifty-dollar rebate. And it was Kemp who was the driving force on Capitol Hill selling what became the Reagan tax cuts to a Democrat-run House of Representatives -- and selling it successfully.

In point of fact, Kemp was famous for selling supply-side economics, dubbed "Reaganomics" after 1981, anywhere and everywhere to any and all who would listen.

Thus in April of 2008 Kemp was out there in his familiar haunt of the Wall Street Journal op-ed page pitching candidate Obama in a piece titled -- what else? – "Obama and Economic Opportunity."

Which raises the question as this economic debate over tax cuts proceeds. Raises it precisely because Obama refused to take Kemp's advice the first time:

Isn't it time to ask: what would Jack Kemp do?

It is, obviously, impossible to know. The real tragedy of an early death is that a unique voice is stilled. Yet Kemp's insistence on relentlessly challenging the liberal status quo for its bread-slicing economics is well on record -- and inspiring today. There is much to remember and learn, as is true from any well-lived life.

In particular what's worth remembering about Kemp is his legendary persistence in making supply-side policy the law of the land in 1981.

Jack Kemp simply was incapable of sitting still when defeated. As an athlete he was small for his sport, suffering constant rejection as he sought to play professional football. Not to mention being battered with repeated, serious injuries. He would later joke, "Now that I've had 11 concussions, I'm ready to run for Congress." That didn't count the broken ankles, shoulder separations, torn knee ligaments and broken finger. The last appeared to end his football career completely -- a quarterback who can't throw a football has no career. Instead, Kemp had the finger set -- permanently -- to fit a football. The next year he was the AFL and Associated Press "Player of the Year."

So it is worth remembering that when Democrats and their ideas of a static economy ruled supreme in the late 1970s, Jack Kemp never shrank from the seemingly hopeless task of taking on their ideas in a head to head fashion. For as long as it took, dismissing the naysayers. Keeping his eyes focused on his goal of cutting taxes and spurring economic growth no matter the lost votes, the scorn from the media, or the tittering of his fellow Republicans.

Hence, it's fair to ask on the eve of the 2011 Republican ascendancy:

• When will legislation be introduced to abolish the estate tax -- period?

• Who will step forward to push zeroing out capital gains taxes in urban areas -- and beyond?

• Who will propose getting rid of the corporate tax?

• What about abolishing the income tax and moving to a flat tax?

• If the current tax structure is the call of the day -- why stick with the Bush 35% rate and not move forward once again to a Reaganesque-Kempite 28%? 

And so on.

ObamaCare needs to be repealed, and the Republican leadership says it will do just that and let the President send back the inevitable veto, launching a major fight. The victory of Virginia Attorney General Ken Cuccinelli in federal court yesterday is, contrary to White House spin, a major victory in the fight to stop ObamaCare in its tracks. But aside from health care, then what? Which Members are going to pick up Kemp's economic growth football and run with it, get tackled with it, get up and get in the game again… and again… and again… until the political goal line of a restored and vigorous American economy is a reality? It is no accident that the House member who appears most determined to do this is incoming Budget Committee Chairman Paul Ryan of Wisconsin -- a former Kemp staffer. But Ryan can't do this alone.

Barack Obama is no supply-sider. He genuinely believes in the leftist dogma of wealth redistribution, its obvious massive failures be damned. But in fact in his ideological resistance to Kemp's well-proven opposing idea of wealth creation Obama has been, at least for now, stymied. Liberals today, as they were when Kemp was very much alive and on the political field of play, are both furious and flummoxed at being pictured -- accurately -- as supporting policies that ultimately always prove to be uncaring and out of touch. Obama's angrily defensive "hostage" imagery of liberalism is a sure sign that the President and his allies have been tackled politically by the GOP as Kemp's message scores yet again.

The policies that Jack Kemp fought for so fiercely and successfully in the late 1970s and early 1980s restored economic growth as the Lincolnian touchstone of Republican Party doctrine. As Kemp predicted in his 1979 book, An American Renaissance, growth policies launched America into a golden era of prosperity with almost fifty million jobs created between 1983, when the Reagan-Kemp tax cuts took effect, and September of 2008, when the government-induced financial crisis struck. Marginal tax rates never returned to their pre-Reagan level of 70%, although the pressure to raise them incrementally -- as evidenced in the current struggle -- has been consistent from the left.

Democrats like to claim credit for Bill Clinton's presidency in the job creation department -- and no less than Arthur Laffer agrees. With a smile he pointed out in the late 1990s that the "Reagan-Clinton" presidency had essentially followed the rules of supply-side economics, and the job creation of the 1990s was due to the fact that Jack Kemp's argument had in fact carried the day.

But the pressure of the Reagan-Kemp success has created a problem for Obama.

The counter pressure, that appeal to the decidedly un-Kempian concept of class warfare, is what is now driving a wedge right through the heart of the Obama-led Democrats. In a disturbing twist, after two years of high-octane class warfare rhetoric from the White House ceaselessly attacking "the rich," police and fire officials on Massachusetts' Cape Cod now suspect a serial arsonist of burning houses and leaving behind the liberal message in more graphic form, with "F… the rich" scrawled at the scene.

Kemp would surely be appalled at the violent turn this anti-capitalist crusade appears to be taking. The first home targeted (reported here in the Cape Cod Times) still under construction with only its exterior completed, was said to be worth $500,000 with three bedrooms and a three-car garage. He would understand something liberals never seem to grasp -- the construction of this home meant good private sector construction jobs at good wages. Jobs that have now been destroyed along with the house.

The actual expletive to be used is here that the arsonist really was saying, "Expletive the working man and woman" and their middle class families.

Is this kind of thing -- house burnings of homes presumed to belong to "the rich" -- directly connected to the President's harsh language over two years? Time will tell.

But there can also be no doubt that, with his back to the political wall, his party routed in the last election, and millions of Americans set to endure a tax increase come January 1, President Obama is, however grudgingly, doing precisely what Jack Kemp told him two years ago he should be doing -- at a minimum.

Kemp used one of his favorite quotes from Abraham Lincoln -- "Mr. Lincoln" as he reverently referred to the nation's first Republican and pro-growth president -- in his appeal to Obama: "I can't believe," said Lincoln, "in a law to prevent a man from getting rich; it would do more harm than good. So while we do not propose any war upon capital, we do wish to allow the humblest man an equal chance to get rich with everybody else."

Jack Kemp agreed.

Even in death, the impact of Jack Kemp's remarkable political life is being felt across America today.

Somewhere, the old quarterback is smiling.

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About the Author
Jeffrey Lord is a former Reagan White House political director and author. He writes from Pennsylvania at jlpa1@aol.com.