Curve Balls
swanson, bret
"Curve Balls" AHEAD OF THE CURVE ART LAFFER SPEAKS BY BRET SWANSON It is the Friday before Christmas in California, and Arthur Laffer is hurtling down the freeway in a silver Lexus ES 400. He's...
...A 1 percent per annum pension fund tax.They had all of these horrible taxes...
...But we never did get the ultimate extension of the Laffer Curve, fundamental tax reform...
...and has certified such memorable collectibles as Mark McGwire's 711th home run ball and the S I million f moos Wagner baseball card...
...Although I wasn't expecting a bad person...
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...Exactly.When we set the Greenbacks to gold, we had a real problem with deflation...
...The one thing they've done well is have a stable currency.And now all these guys have gone in there and told them, you've got to inflate...
...It's Schumer, it's Hillary, Corzine, it's Feinstein, it's Boxer, it's Wellstone...
...precisely...
...If you feed a dog, you know where it will be.Taxes are like that...
...If they had a defined contribution problem, there would be no demographic problem at all...
...On leave from a teaching job at the citadel of American free-market economics, the University of Chicago, he quickly impressed his OMB boss, the future Secretary of State George Shultz, with what turned out to be an uncanny prediction of the gross domestic product in 1971...
...I did vote for W I didn't expect nearly as good a person as I've seen...
...And that is where he seemed inclined to stay, the happy Hobbit of Rancho Santa Fe...
...All the stuff we do on Social Security is really silly as well...
...In fact, far from it...
...Within hours, White House aides began floating the idea among conservative economists, Cheney's interest was apparent, and e-mails critiquing the proposal began to fly...
...The rumblings began last spring when he wrote in the Wall Street Journal (and The American Spectator) that easy money from the Fed in response to Y2K computer fears-not tight money signified by interest rate hikes and a rising dollar-had caused the stock market crash and economic slowdown...
...What if...
...The Fed Funds rate follows the market...
...And what you're seeing now is the yen fall...
...Gary and Aldona, the super-supply-sider former Reagan Treasury officials...
...Hello...
...It's okay...
...Some just find the social gains of redistribution, or whatever, overcome the economics...
...Now we live in a world where everyone realizes it's a supply-side world...
...No, it's ridiculous...
...The Fed is not proactive on interest rates...
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...A very elegant man...
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...And I couldn't raise my head because, of course, if I became the point man on a Democratic issue, well...
...I don't see any wage and price controls...
...The central insight embodied in Laffer's curve is that lower tax rates-by encouraging people to work, invest, create (and report their income)-can expand the economy, the tax base and tax revenues...
...P11G DEALER 0519 period of convertibility there were always periods of judicious suspension of convertibility"You had the Spanish inflation with the discovery of gold in the New World...
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...They didn't increase interest rates...
...I'm giving you a hypothetical.You'd have to have a huge amount of inflation to get $275 to be the right price...
...Happy to oblige was Laffer, who pointed to a inandala sketched on a cocktail napkin-two perpendicular lines and an arc-as the answer to the complex problems plaguing the nation...
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...Is social security privatization Japan's answer...
...So what if a former gold-standard adherent is playing good cop with a Fed chairman who has marginalized most supply-siders...
...But politically, I'm very worried about state and local governments raising tax rates...
...When the inverted yield curve flipped, the liquidity crisis was over...
...Not by being the head of a major corporation...
...Taxes can be exacerbated by inflation...
...Puerto Rico, the tax reform for Carlos Romero-Barcelo...
...Hillary and Dick Gephardt, meet Larry Lindsey...
...I'd rather see it for five years...
...And reveled in America's Eden, raising kids, cultivating palm trees, rearing giant turtles and helping turn Jerry Brown from whatever he was into a temporary flat-taxer for his quixotic 1992 Democratic presidential run...
...It was perfect.You saw who liked it.The Robbinses...
...It doesn't lead it...
...No, not a little spike...
...Trees from around the world dot the Laffer family's sixteen hilltop acres.Visit the barn and you will meet Mahatma, a 450-pound Aldabra tortoise from the Indian Oceanthe endangered geochelone gigantica, if you are wondering...
...Yes...
...Laffer's six children all live in California...
...Yeah, when you first take the base out, you do have a problem.There's a scramble for funds...
...I think Larry Lindsey has not done the proper job, and Larry has all the capacity to do a great job...
...What's the outlook...
...Deflation is falling prices.You want to use the CPI or the Producers Price Index (PPI).And Japan has had some deflation...
...Our problem is really terrorism and related issues.The global role of the U.S...
...as a moral leader, as a military leader.You know, the Europeans are not our guys...
...But if I borrow $100,000 at 10 percent, and I lend $100,000 at 20 percent, should I be liable for a tax?Yes, because I've increased value...
...As you can see, by having the discounted present value of the increase in after-tax cash flow, capital gainsuntaxed capital gains-already include the effects of all taxes on future increases in earnings.Therefore, any additional tax on capital gains is double taxation.And I think you'll find every economist agreeing with that...
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...The Laffer Curve, one of the icons of supply-side economics, was born...
...So the theory behind the flat tax is you want the lowest possible rate on the broadest possible base...
...And you know, the problem with getting it right, and this is what Britain did with the wrong exchange rate after World War I...
...Don't get me wrong...
...It's true of all of us...
...The idea was to give the post-terror economy a quick boost with a ten-day nationwide sales tax holiday...
...It's not that I'd just like to see W win...
...Cheney, Rumsfeld, and two of their good friends from the Ford administration, Paul O'Neill and Alan Greenspan, form a Washington power pyramid...
...Ford wanted to WIN-Whip ~rrrrrrrrrrrrrrr~rrrr irrr//r////I a/r////////rr1 ia~rrI //I L• M I • r /I • / / /i\r1i I M r"I I • : Id /uI1rr, • '1 / / , I • r / rVI • //// r /l /I//~ /r1 • ' //r ~I • /// f MMMMMM i• ///w u[UI/////om r• rrry^~r~rrrrrrrrrrrrr~ Inflation Now!-with a five-percent tax surcharge, which was supposed to re-ignite the American economy by taking big bites out of it...
...The reason why you've got huge trade surpluses in Japan and huge trade deficits in the U.S is...
...They took the base out, but continued for five months after that increasing interest rates...
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...Isn't there double taxation involved...
...It doesn't lead the T -bill...
...If I were a member of the Fed, would I have gone along with the monetary base expansion...
...But I would say taxes...
...How dumb can they be...
...Tons of people had.The best one I've seen is the fourteenth century Mugaddirnah, by Ibn Khaldun...
...But you won't get 5 percent, which made it a budget discussion...
...Watergate and stagflation gripped the country...
...Not a pretty thought...
...Art Laffer, now 62, is once again plugged in-and making waves.The last time he did that, back in his napkin-sketching days, liberals and traditional Republicans were the ones expressing horror.This time, however, it is Laffer's supplyside friends and proteges who think he's crazy...
...I might well have...
...We cut it down to 50...
...When you have defined benefit programs that are then matched with demographics, you have a problem...
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...They use a price rule...
...We need IRAs, Keoughs, 401(k)s, all the defined contribution plans...
...It's bad English...
...You have to have them...
...He had a minor fender-bender that very day but says there have been no major accidents in decades...
...I look at the price index...
...And you need something you can get passed with the Democrats...
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...All those guys who had loans not only didn't get new ones, they had the old ones recalled...
...I think we can get nice, solid growth in 2002...
...Tax rates and revenues became assumed as one...
...Now let's talk about Japan...
...But I'd rather see it for a year than for nothing...
...The discount rate follows the T -bill...
...There are peacocks, pigs, and a herd of rare African deer...
...Otherwise, the House of Representatives could go Democratic, and politicians could make what is a mild recession much worse...
...And if you don't do it, you take the risk of being caught one way or the other...
...No one today is proposing legislation for a 93 percent marginal tax rate, which is what it was when HarryTruman cut it.Those people were our ancestors, though it's hard to imagine them even being the same species...
...I think the CPI overstates inflation...
...So we now live in a supply-side world...
...Why did it take so long...
...It's bad economics...
...They have so raised taxes in Japan that everyone in their right mind wants out.The overhang in the unfimded liabilities of social security, in unfunded liabilities for corporations...
...I'd rather see it for 500 years...
...Japan's problems are political and cultural...
...Would he trade it all for a seat on the Fed, as some suspect his recent string of trial balloons might be signaling...
...One on business value added...
...Why hadn't anyone else pointed that out...
...And how do you define deflation...
...That would be called a Japanese export, a Japanese trade surplus, and a U.S...
...Attempts by the supply-side crowd to hold Laffer to some sort of religious eco nomic orthodoxy amuse him...
...Justin yells...
...Though rooted in thousands of years of human experience, academic economists and politicians of all stripes laughed...
...In the mid-1970s, the marginal cost of collecting taxes was huge.The five percent tax sur JANUARY/FEBRUARY 2002 • THE AMERICAN SPECTATOR 37 charge put on by Gerry Ford was just a major mistake...
...As you've said, "rebates" don't increase demand...
...This bag [points to canvas bag on table that he carries with him]is from the '89 Drexel conference...
...We have a very, very weak economy," Laffer says...
...Now let's talk about currencies.You're a company and you've got a currency exposure.You can take care of that currency exposure if you'd like...
...No signs of deflation...
...But doesn't the dollar's 30 percent revaluation over the last five years have a drastic effect on companies that borrowed money at one level and have to pay it back at a much higher price...
...Why do you like a value added tax...
...An asset has a negative rate of return in Japan-and a positive return in the U.S...
...The California tax revolt, Howard Jarvis and Prop...
...Not obvious at the time you said it...
...He sure did...
...What about mortgage interest deductions...
...So what if he tries to help a few liberal senators cut taxes in an unorthodox manner...
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...He still wants big things-an 11 percent flat tax and privatized Social Security-but says you've got to figure out ways to win politically...
...everyone sends their capital here...
...How do you define Japan's st They went from some 60,000 yen per ounce of gold to some 30,000 yen per ounce of gold in the last decade.., See, you define it in terms of gold, I don't...
...I just brought it back to a public realization...
...See, the one problem with gold, if you don't fix the price right, you got a huge hit coming...
...That's the one we used to really show Reagan what tax cuts can do.We've been winning and winning, and we lose a little, but generally we've won...
...I'd love to see interest rates much higher in Japan...
...Yeah, that's exactly what's going on...
...Quotas, no...
...Don Regan coming from Merrill does.We've all bought bad assets...
...The Democrats, most of them, would like to do something that would help the country...
...And one on personal unadjusted gross income...
...All you can do is allocate the burden of it to someone...
...You can never increase demand without increasing supply...
...I think gold would have been great when you had a bad Fed.The point is a good Fed is always better than some arbitrary rule...
...You can find the idea everywhere-Adam Smith, David Ricardo, they all have it...
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...When Reagan was reelected in the 1984 landslide, it was there.W needs that type of base to be able to push his agenda forward in the international arena...
...Going out of work...
...Laffer explained how a temporary cut in sales taxes can actually have supply-side effects (if you know items will be less expensive during a certain period, you will work harder for funds to buy them...
...The result was the Reagan tax cuts...
...I just look at the value of the yen in terms of the dollar during this period...
...But no one was buying Laffer's line...
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...On a five-year path, that spike is a blip...
...It's not great...
...I really see a group in the Senate as being very harmful...
...The rate, I think, was 87.1 percent...
...Then take all federal taxes, (except the sin taxes, which are there to discourage behavior not collect revenue)-I'm talking payroll taxes, income taxes, corporate profits taxes, all federal excise taxes, tariffs, telecom taxes-get rid of them all...
...Much better than I thought he'd be...
...The American Spectator: What's the simplest explanation of the Laffer Curve...
...What's the rationale for that...
...AHEAD OFTHECU RV E ART LAFFER SPEAKS B Y B R E T S W A N S O N I t is the Friday before Christmas in California, and Arthur Laffer is hurtling down the freeway in a silver Lexus ES 400...
...We've had an enormous asset value reduction in the country...
...Why haven't Japan's high tax problems been inflationary, rather than deflationary...
...And if you get a huge political reversal in November, I think it bodes very ill for the future of the economy...
...They've got a huge demographic problem...
...He wanted to reduce the deficit in '92, and he also wanted some new programs, so he made it 13 percent.We would have run huge surpluses...
...It's not been unheard of...
...I don't see any major tax increases coming.The Fed's done a great job...
...import and a U.S...
...They've just done a crackerjack job...
...Now, the problem with Japan, the reason interest rates are so close to zero, is they have no real return on capital...
...And I look at the value of goods and services in Japan...
...He taught for several more years and then started his own California-based economics consulting firm...
...You don't have time to do a 20-year plan for 2002...
...Let me tell you, no...
...Keeping in touch with is old friends, he was part of Reagan's informal team of economic advisers, but he never again took a full-time job in Washington...
...You need a zero capital gains tax rate because economically it's the right thing to do.A capital gain is the appreciation in the value of an existing asset.You buy something at 10.You sell it at 13.You've got a capital gain of 3.The value of an asset is the discounted present value of that asset's after-tax cash flow Therefore, capital gains is the discounted present value of the increase in after-tax cash flow...
...Laffer's West Coast perch seems to instill an optimism, a good cheer, not found among those closer to Washington and its insider battles...
...Laffer gained custody and was struggling as a forty-two year old single father when the twenty-two year old "angel" saved them...
...I'm just thinking about ways to make the world better...
...I think it makes a lot of sense to tax 11 percent of each because you make the base that much bigger and the rate that much smaller...
...Let's talk about your debt, let's not just talk about high risk for a company, which gives you high yields...
...Because they've had a wonderful monetary policy until recently, until weirdos have gotten in there now, and told them that they have a deflation problem...
...Yeah, they wrote a great piece on Jerry's flat tax...
...He's treating his youngest son, Justin, 18, and eldest grandson, Kai, 13, to a semi-pro hockey game between the hometown San Diego Gulls and the Bakersfield Condors...
...But today they can't cover because the dollar is the global standard...
...You know I'm not fan of his father's...
...The monetary base increased when the Fed put temporary reserves in bank vaults in case of Y2K bank runs...
...I can remember a conversation I had withVolcker in 1983 where he used spot commodity prices, an upper band and a lower band, and when commodity prices rise above a certain level, he sells bonds in the market and takes base out of the system.They've been using, effectively, a price rule through policy...
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...Sixty-five.They had a 1 percent transactions tax...
...They've had very low interest rates and very low inflation...
...I wouldn't go that far...
...I don't think so...
...Ask them where they got their Ph.D.s.," he laughs...
...If a company has a problem with different currencies, they should cover...
...And once again, Laffer is making trouble...
...If we had fixed the price of gold at say $800 an ounce...
...But it's double taxation of everything the same...
...And now they've caused the Bank of Japan to start printing money ridiculously...
...You commend Volcker and Greenspan for following a price rule...
...Imagine we have a gold standard, at today's $275 per ounce, and we discover a new gold mine that can produce unlimited quantities of gold at $5 an ounce...
...Let me tell you, the two equal...
...So why do you say the yen's been stable...
...How do you reconcile the fall in gold with a continuation of the price rule...
...By the way, I'm not against gold...
...A demand-side plan...
...Or after our Greenback era of the Civil War...
...Because it's got a huge base...
...Well, it came out to 10.87 percent when I did it for Jerry Brown...
...by maybe a percent a year...
...But you have a pretty significant move down from $385 in 1996 to $275 today...
...Prior to the Fed removing the base, we were building an inflationary model...
...But that's a special case that doesn't happen...
...And I would like to see a zero capital gains tax for a year...
...In fact I voted for Clinton twice...
...A one-year capital-gains gimmick...
...Number one, it should start out on the first dollar you earn...
...One is the arithmetic effect: If you raise tax rates, you collect more money per dollar of tax base...
...He has all the experience-And he has the humility of someone who has lived in the marketplace...
...Just to win even in your lifetime is amazing...
...People will do all they can to avoid paying taxes...
...Gold is a great anchor, and it's a great way of controlling miscreants, like we had in the 70s...
...Arthur Laffer: There are two effects tax rates have on revenues...
...All interest income should be taxable, and all interest expense should be deductible...
...Oh, like you wouldn't believe...
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...Oh, there is...
...The price level has not shown a huge drop in prices...
...In November of 2001, Laffer endorsed an ill-fated tax proposal offered by two liberal senators, Democrat Patty Murray of Washington and Republican Olympia Snowe of Maine...
...Paul O'Neill coming from Alcoa does not serve him well...
...Commodity prices were at 15-year lows, and debtors the world over were going bankrupt at record levels, classic signs of deflation...
...I thought it was pretty amazing we turned it around as fast as we did...
...My view at the time was that there was no reaJY2K problem and this was a very dangerous precedent, sort of a 1970s-redux, and what would happen was, sooner or later, banks would have the constraints and reserve requirements taken off, and they would make loans to marginal companies, they would make loans for marginal projects at good companies, and the consequences of the whole 1999, early 2000, model would occur.When the Fed realized the mistake, it did exactly as it should have and removed the base...
...Dick Cheney is a young George Shultz...
...Then, on a cool autumn evening in Washington in 1974, Laffer, 35, had one of those moments that end up defining someone for the rest of his life...
...They jump off at the exit for Kai's house, searching for the right quiet street...
...If you believed that, 150 percent tax rates would yield tax receipts greater than GDP...
...I'm not here to scream," Laffer says...
...Doesn't a revalued dollar affect the ability of borrowers to roll-over their debt...
...That was in a nice mood...
...Almost two years later, aren't companies still desperately looking for financing...
...Gerry Parsky was an undersecretary of the treasury under Simon and is just really good...
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...I think he would have won if he hadn't named Jesse Jackson as his running mate...
...Well, the Fed Funds rate...
...When Y2K problems didn't materialize, the Fed removed the reserves, and all the indicators that had looked a bit inflationary-gold spiked a bit, commodities spiked a bit-resumed their fall toward lower prices, an indication of deflation...
...But when Jimmy Carter arrived, Laffer turned his back on the Washington power game, and headed off to California...
...If they get control of the Senate, and the Democrats win the House, and Bush is still president, they can do unconscionable acts, and Bush will get blamed...
...But you especially need the domestic support...
...No, no, I don't think so...
...Isn't a zero percent capital gains tax rate really the ultimate IRA or 401(k...
...I mean lived in the marketplace by buying and selling assets...
...The world was coming back to that type of model...
...Or you can tax it 11 percent at the individual level and 11 percent at the production level...
...Now, you don't have to...
...Yes, spot commodity prices today are low And that's the only one that's off the mark...
...If you believe that the political process is not going to change drastically...
...That was it...
...The price rule follows a bundle of commodities.The oneVolcker described to me was a spot commodity price index, which includes gold...
...We have to show the way, not look for coalitions.We have to step up front...
...But it can also force you into policies that are really terrible if you set the price wrong...
...No, I've just been a conduit for a loan...
...How fast do you think we grow in 2002...
...A lefty sales-tax holiday...
...He ran the Bush campaign here in California...
...And have two taxes...
...Most free-market economists believed that after the Fed removed itsY2K cash reserves, there could be no long-term inflationary impact...
...It was 1970s redux...
...Isn't that a good thing...
...Laffer suggested eliminating the capital gains tax for all assets bought in 2002 and held for three years or more...
...The one solid rock, the finest person in my mind, is Dick Cheney...
...McCaw Cellular and these others...
...You gotta tell me...
...Revalues against what...
...Do you believe in the CPI...
...You've praised Treasury Secretary Paul C'Neiri forr his intelligence im the lack of a coherent world I' has that woridview...
...But somewhere along the road that brought Republicans-and a F r It 36 THE AMERICAN SPECTATOR • JANUARY/FEBRUARY 2002 lot of his old friends-back into the White House, something happened...
...Revalues against goods and services...
...Marginal tax rates have come down substantially, and the base has expanded.We've got a lot of things left to do, but they're not nearly as imperative as back in the 70s.That was serious trouble, and we needed a quick fix...
...You might even lose revenues...
...Barry Goldwater opposed the Kennedy tax cut...
...Has Japan's deflation been primarily because of monetary policy...
...Paul Volcker was terrific...
...Art Laffer has been hurtling along the usually sedate byways of the dismal science for three decades, ever since he hit Washington during the Nixon administration, as the first chief economist of the Office of Management and Budget...
...Laffer is aware of the sniping...
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...Traci, I affer's wife of twenty years,"rescued" Laffer and his first four children after Laffer's first wife abandoned them in the late nineteenseventies...
...It's the transportation costs that prevent a hundred percent shift in one day...
...They went up and down...
...Laffer was suggesting that inflation (too much money), rather than deflation (too little money), was the problem, and that economic growth of 6 percent around the turn of the millennium was unsustainable.We were borrowing growth from the future and would now have to pay it back...
...We've always lived in a supply-side world...
...We've been able to get a stable value of money without some hokey hookup, a return to the gold standard...
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...If you held the current political position, I'd be fine with the economy...
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...Bob Dole opposed it...
...In mid-December, Laffer offered another temporary tax cut idea, this time directly to his old friend, the vice president...
...The top marginal tax rate before Obuchi dropped it was 65 percent...
...How about our president and vice president...
...Not because they inflate, but because the marginal return on capital goes up and you get the real yield on capital rises.The way it's much higher in the U.S...
...Too many "pundits" and "op-ed writers" masquerade as economists...
...Against what...
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...His big thing was to give rebates to people who never paid taxes.Which is not only bad economics but is also linguistically flawed.A rebate requires that you've already paid...
...Economics is not really our problem as it was in the 70s...
...We would have kept on inflating...
...It would be wonderful if he could do the zero capital gains tax and get Gerry Parsky as secretary of the treasury...
...Alligators lurk in the greenhouse...
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...You can tax GDP at, what is it today, 22 percent of GDP...
...Keynes has it explicitly.What had happened in fiscal policy was that everyone had forgotten it for thirty or forty years...
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...Isn't the reason we use gold, however, as an indicator if not a standard, because there are so many fewer disturbances in the gold market than just about anything else in the economy...
...Your answer is the zero capital gains tax rate `or all assets bought in 2002...
...Then you could do today, on a global scale, as big a revolution as Reagan did...
...But when the dollar-effectively the world's currency with 70 percent circulating overseas-has a significant revaluation...
...They needed it badly, and Milken came along and was able to satisfy a lot of that...
...But two-and-ahalf, three years ago, they were pretty high...
...You can predict the discount rate changes by looking at what's happening at the 91-day T -bill...
...Oh no...
...You've written that commodity prices could be low because of the bad economy, but the fall in commodity prices preceded the bad economy by four years...
...Today raising tax rates in a recession seems silly to almost everyone except Tom Daschle and the junior senator from New York...
...So why was the T-bill rising during those six months...
...They don't have a monetary problem.They have a tax problem, an overhang, a defined benefit problem...
...Then you're never overfunded or underfunded.You can't get rid of market risk...
...But everything followed g v Coffee, steel, grains, oil...
...O'Neill's just a catastrophe waiting to happen...
...Laffer and his mentor, Robert Mundell, a future Nobel prizewinner, were pariahs...
...Evasion, avoidance, underground economy, tax shelters, etc...
...None...
...I've been trying to get at deflation, which I think you've called a bunch of "hooey...
...but they can also spur inflation, as they did here in the 1970s...
...where over S?{A) million in silver...
...You need something that hits, now...
...They were falling before the bad economy But you had a sharp turn up in inflation during the Y2K period, which you know I wrote in the Spectator...
...What does your perfect tax code look like...
...It doesn't seem that Greenspan continued with that price rule...
...That's why I wrote Jerry Brown's flat tax proposal.We came pretty close-at the 1992 convention, he had the second most delegates after Clinton...
...Okay, you're talking about exchange rates.You're not talking about high-risk investments...
...Collector's Universe is the leading collectible's certil-icalion sere ice...
...He and Don Runisfeld are just super, wonderful public servants.And it's all a credit to W Will the bad economy block him from achieving some of the other big, important goals...
...No, no, no, no...
...After Reagan's tax rate reductions were put in place, inflation plummeted and real tax revenues surged 39 percent in six years.We also got an 18-year boom...
...A JANUARY/FEBRUARY 2002 • THE AMERICAN SPECTATOR 41...
...I've just been a pass-through...
...His self-imposed 80 mile-perhour speed limit, I'd learned, applies not just on thoroughfares but on twisty mountain roads and side streets as well...
...What I tried to do was to show that while you may get more revenues, you won't get 5 percent more.You may get 4, 3, 2 percent...
...But after they withdrew the monetary base, rates kept on rising for those six months...
...As I sit here with you, nothing tells me there's a real problem...
...Today there are eight grandchildren...
...DON'T MISS OUT, ORDER YOURS TODAY...
...I think he's been failed by some of the people he selected...
...There are no distortions...
...I think W has been an excellent president...
...By transferring resources from the productive to the less productive, they decrease both supply and demand, and shrink the economy...
...I thought there was a very serious problem of the Y2K expansion of the monetary base...
...No.The liquidity problem's over...
...The measure could boost asset values by 5 to 15 percent, Laffer believes.The economy would do well and people would wonder why we ever had a capital gains tax...
...All I'm saying is that when we have disturbances in the gold market, it causes problems in the money market...
...Art, Jr., 36, runs the company...
...It's not a movement, it's economics," he insists...
...Just try putting the rate back up to 20 percent...
...Inside the house (as in his office) is a clutter of art, crystal, china, antique tables, cabinets, desks, chairs, and shelves, vases, pedestals, books, plants, maps, artifacts and fossils...
...Maybe not...
...It seemed a typical effort to pump up consumer demand, not a worthwhile goal to supply-siders who focus on producers as the source of growth...
...That's where I think Rumsfeld and Cheney have done such a wonderful job...
...It gives you humility...
...A pedestal in the living room is cloaked with an American flag and topped with a bust of Ronald Reagan...
...If you beat a dog, it's gonna run, but you don't know in which direction...
...Each ol'these truly unique collectibles...
...And now, at the end of that boom, Laffer's old crew is back for a last hurrah...
...I've been a financial intermediary-a bank, a savings and loan, an insurance company...
...No gimmicks, please...
...Then there's the economic or incentive effect: If you raise tax rates on something, you reduce the incentives for doing that activity and end up with a smaller tax base...
...Gerald Ford's chief of staff, Don Rumsfeld, and his deputy, Dick Cheney-things were different then-were sitting atop the Hotel Washington in the Two Continents lounge near the White House...
...You pick that machine up, load it onto a ship in Japan, ship it to the U.S., offload it in the U.S., that machine goes from a negative rate of return to a positive rate of return...
...Liquidity's one thing...
...Currency exposure implies You're operating a business overseas, and there are difficult foreign exchange issues...
...trade 40 THE AMERICAN SPECTATOR - JANUARY/FEBRUARY 2002 deficit...
...Among the ruins, was a limited cache of silver, go] d, and platinum American Eagles, Mill preserved in premium gem uncirculated cnndilion...
...By having the lowest rate, you provide the fewest incentives to evade, avoid or oth erwise not report taxable income...
...Social Security puts it all on the economy...
...It's reactive on interest rates...
...What did Volcker and Greenspan use that allowed them to do better than gold...
...Gold went up to $325 an ounce...
...I'd rather see it for two years...
...On monetary policy,Alan Greenspan's been wonderful...
...By the way, that's just on taxes...
...Eleven percent sounds pretty good...
...You're very cheerful...
...WTC GROUND ZERO RECOVERY 0 n November I. 21 )1, al nitnt two months odor the initial September 11th terrorists attacks, workers finally reached the Iron Mountain Depositon vault...
...Throughout the 38 THE AMERICAN SPECTATOR - JANUARY/FEBRUARY 2002 SILVER AMERICAN EAGLES RECOVERED HURRY, SALES ARE BREAKING RECORDS...
...The important leveraged companies of the 80s-MCI, TCI, McCaw Cellular--all almost failed several times, but they kept rolling over their debt...
...In the fall of 1974, Rumsfeld and Cheney were looking for alternatives...
...Laffer also believes President Bush needs something big to ensure at least a mild economic rebound before the November elections...
...That may be a blip on the five-year path, but the economy's a blip, probably, on a five-year path...
...Two work with him at Laffer Associates, which advises big Wall Street firms as well as European and Asian clients...
...gold and platinum had been buried beneath the rubble...
...Many conservatives, who don't like "holding periods" and who tend to favor permanent tax changes that simplify the code, think the proposal resembles an incentive twisting Democratic attempt to "fine-tune" the economy To many of Laffer's fans and followers the capital gains "gimmick" seemed the third strike on him in one year...
...I don't see any major tariff increases, do you...
...SUPPLIES ARE LIMITED, AVAILABILITY NOT GUARANTEED...
...Laffer whips the Lexus around and surges, then rolls into his daughter's driveway...
...My favorite is a guy named Gerry Parsky of Aurora Capital, from San Diego...
...Intellectually, we've won...
...Well, has Japan deflated over the last decade...
...Here's why: If I bor Lrow $100,000 at 10 percent interest and I lend $100,000 at 10 percent interest, have I done anything of any economic consequence that would require me to pay a tax...
...And it's all value added.You want to tax the value added to the GDP because that's what you're getting the resource base out of.You want to tax both unadjusted gross income and business value added because that way you get the whole GDP twice, so you can have half the rate...
...It would take six more dismal years and two presidential campaigns by Ronald Reagan to fulfill Laffer's inspired doodling...
Vol. 35 • January 2002 • No. 1
