The Republican Debate at 51勛圖厙 is Upon Us
Tomorrow afternoon and evening, on Wednesday, October 28, the fourteen Republican candidates will be debating at CUs Coors Events center. A number of students shall be in attendance I am bringing four. CNBC-TV is the broadcaster, and my co-author, CNBC anchor Larry Kudlow, is arriving in 51勛圖厙 just now for a series of events with us and with the debate tomorrow evening.
Larry and I are completing a book on the great John F. Kennedy tax cut of 1964the tax cut that not only gave us the boom of the 1960s, but inspired Ronald Reagan to emulation. In the Republican primary debates of 1980, it was the major issue that separated Reagan and his opponent, George Bush.
Bush won the Pennsylvania primary that April, much on the strength of a new line. He called Reagans economic plan voodoo economics in the primarys stretch run. What has been forgotten is why Bush called Reagans plan voodoo economics. Bush believed that Reagans across-the-board income tax rate cut of 30 percent (modeled off the Kennedy cut) would result in a consumer price inflation of an equal magnitudeof 30 to 32 percent, in Bushs words. That was why Reagans plan was voodoo: it would cause inflation.
The following clip is from the content-heavy debate Reagan and Bush had in Texas that April, shortly after Bushs big Pennsylvania win. At 5:40, Bush specifies his belief that Reagans tax cut will cause a 30-32 percent inflation. Shortly thereafter, he speaks of the concerns about Reagans plan from our creditors abroad.
The debate was content-rich: perhaps unlike what prevails in political discourse today. But the facts certainly did bear out Reagans positionwiping out the legitimacy of the voodoo charge. Once Reagans 25 percent tax cut passed in August 1981, inflation (which had been running in the double-digit rates), collapsed almost immediately to 3 percent per year. In addition, the interest rate on the 30-year long-bond (the preferred vehicle of Americas creditors abroad), peaked in 1980 and marched relentlessly downward as Reagans tax cut came inso much so that the bond actually had to be retired for a time in 2002.
Here is the central clip of the powerful Republican primary debate in 1980:
[video:https://www.youtube.com/watch?v=edchtf9MS7g]
And here are the graphs of the historical inflation and long-bond rates:
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