Also in this playlist...
This transcript is automatically generated
Learn from the past our next guest book suggest ideas for restoring prosperity in America looking back at the not to distant.
Good history joining us now is Bryant -- -- trip that's nice to see you author of the content class the rebels who sparked supply side revolution.
And restored American prosperity he.
In Houston Brian thank you so much for being here looking back it is really making the case for supply side economics and really what happened in this country.
In the eighties but really started to begin began among Republicans in the seventies but would that fix our problems today when it seems like.
We'll have a supply problem but we have a demand problem and not inflation but -- deeply.
The thing people don't understand about today's crisis is that government constant it was not the market because of his problem.
It was the Federal Reserve which for four years in a row after 2001 kept the federal funds rate negative.
And then there's all the speculation against the dollar -- so Fannie Mae backed up all the mortgages and then that the crisis was caused by government.
So you solve that problem by tightening money cutting taxes what Reagan did in the early eighties.
Yeah Brian you know it's interesting too that you look back at history needs -- and we hear this argument so much on there I am.
-- this argument so much about you know supply side economics is dead trickle down economics is dead.
When things get back to a sense of normalcy do you believe we're gonna find that those arguments were completely without merit I don't I don't want I don't understand this bashing of trickle down economics and it just seems to me -- economics.
Is by nature.
In 1982 the supply side revolution initiated -- 25 year run of noninflationary prosperity that's as great as any in the industrial history of nations.
The thing about supply side economics is it's what helps the dust -- it was a strategy that was devised to solve economic crisis.
-- a crisis -- 82 was much worse than today.
And the Fed came in and -- interest rates and the tax rates were cut by 25%.
And you had the incredible non inflationary boom for quarter century.
-- you get the same bang though cutting taxes from today's levels because back with today's top marginal rate at the federal level.
As half -- what it was.
During the 1970s.
And so at what point do you have diminishing returns where.
You don't have people who work harder necessarily you don't have you get rid of some of the black market activity.
That and that's a good point but look what's on the horizon.
The president's talking about repealing the bush tax cuts taking a marginal rate up to 40%.
Putting an 8% surcharge on small business and then places like California -- 10% income tax that makes the marginal rate of taxation 60%.
Higher than in Sweden which your previous guest said you know the rates -- going down.
So I mean that we we can have tax increases that the opposite tax cuts.
If we get six weeks vacation and a year offer you know -- maternity and paternity leave you know maybe -- four but Brian.
-- is an interesting chapter in your book about what you call what people call bracket creep now inflation is not necessarily on the horizon of a lot of people but.
Everybody -- at some point inflation will become a problem again.
So let's say a few years from now inflation goes up the say 3% a year for five years of the cost of living.
For everybody rises employers.
Have to raise salaries to meet the cost of living.
Adjustments the problem right is that because of the different progressive tax brackets.
Employees because inflation may be seeing more money -- honey I got a 7000 dollar a year raise.
But yet bring home less because they're gonna get trapped in those higher tax brackets.
There is one wonderful difference between today and back you -- that this is.
Yet -- that -- -- fewer brackets and the tax code is indexed for inflation so it's more difficult to find the next bracket the big problem is on the capital gains side.
If there's inflation you pay tax just if your stock appreciates what's inflation.
So if we're gonna raise the capital gains tax -- the president's saying and we have inflation you'll have people run away from the stock market because they'll be.
So we paying taxes on money they never really made.
Out the mortgage interest deduction you can deduct interest on up to one point one million dollars in home that is that's supply side stimulus.
Or was it a bad idea.
Well -- the supply siders like it's just to make the tax code simple and low.
So adding all sorts of little doo dads like loopholes isn't part of the supply side revolution with the supply -- want to do is just make it very clear that if you have income that will be taxed at a very low rates.
You don't have to worry about how to hide it.
What do you think's gonna happen and Brian.
I mean do you think we will learn from.
What happened in the 1970s or do you think we're gonna you know here listen everybody can use -- to their own advantage we seem to be here in a lot of that.
On both sides of the aisle recently what he -- gonna happen which -- predictions.
You know to tell the truth I think it depends on how really ambitious the president and the congress argue they want to have strong growth on their watch -- are they willing to preside over mediocre economy.
Kennedy for example in the early 1960s what's the economy do nothing for his first year and a half.
And then he said -- -- I'm -- have high growth on my watch no matter what he told the Fed to cut to raise interest rates and the cut taxes dramatically.
There's a seven year -- -- 5% per year growth.
If the president wants that kind of record -- just follow his predecessor in the early sixties.
Why didn't tax the top tax rate and -- probably no one paid it was north of 9%.
Before Kennedy cut taxes is that really is that is that the possibility that we stand in the thanks.
That the possibility is the one of outline that's of a 60% real tax rate if you throw in state income tax rates in California.
That's simply can't happen.
Which it -- the tax rates should be guaranteed to be 35% top or lower and then the federal serve can raise interest rates.
With that will do to secure the value of the dollar in the low tax rules that guarantee that people have the value the dollar that is in fact holding its value.
Otherwise you'll see people doing things like trying to invest in foreign companies like you -- with the Cadbury deal.
Brian we could talk to you all day but please come back have time to spread out Ryan Doumit commits the altar of iconoclast the rebels who sparked the supply side revolution and restored American prosperity.
Everybody should check it out front they.
Filter by section