Kudlow's Corner

A Challenge for Hillary: Return to a JFK growth agenda


When John F. Kennedy was elected president, he surprised both Democrats and Republicans with a bold tax-cutting plan to solve the problem of a moribund economy. He had campaigned on "getting the country moving again," and had set a 5-percent economic-growth target, but he never specified how he was going to do it. Then he opened everyone's eyes with a plan to lower marginal tax rates across the board.

Former U.S. Secretary of State Hillary Clinton speaks during a press conference at the United Nations in New York March 10, 2015.
Mike Segar | Reuters

JFK's advisors proposed a traditional Democratic approach: temporary targeted tax cuts. But Kennedy insisted on lower tax rates that would create much higher rewards for work, saving, and investment. And Kennedy argued that his lower tax-rate incentives would so expand the economy that after a few years his tax cuts would pay for themselves.

He was right.

After his plan went into action, the economy boomed and revenues went up. And there was no inflation because he insisted on a sound dollar that maintained the post-war link to gold. Later on, Richard Nixon, Gerald Ford, and Jimmy Carter would throw out JFK's growth model piece by piece. The economic results were disastrous. But Ronald Reagan turned back to the Kennedy approach in the 1980s and thus launched a 25-year prosperity.

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So why am I thinking so much about the JFK tax cuts these days? Two reasons: Economic historian Brian Domitrovic and I are writing a book on this. And Hillary Clinton just announced she's running for president — and I have a challenge for her.

Hillary's smart, hard-working, and experienced, and she's not going to be anybody's pushover. So I challenge her to think outside today's liberal-left Democratic orthodoxy and return to a true, JFK-style growth agenda.

Today's greatest domestic challenge is to restore economic growth. The trend line used to be near 3.5 percent. Now it's barely 2 percent. This is not the American way.

But it's my contention that if Mrs. Clinton chose pro-growth policies such as her husband (working with Newt Gingrich) implemented — reduced investment-tax rates, rollbacks of unnecessary regulations, budget restraint — she could shock and electrify the country.

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Would she do it? Would she attempt to bring back the JFK/Bill Clinton Democrats and stop the Bill de Blasio/Elizabeth Warren Sandinista Democrats?

Unfortunately, it doesn't look good.

It's early in the campaign, and Hillary's already talking about taxing the rich, punishing CEOs, redistributing income, regulating more, and spending more. Her buzz terms are women's pay, parental leave, care-giving leave, and paid sick days.

Already, Hillary is going wrong. And she will be proven wrong if this is her agenda.

Take the idea of a growing CEO-employee pay gap. It's not true. The AFL-CIO has created a phony argument, taking the pay of 350 CEOs from America's biggest companies, comparing that to average worker wages, and coming up with an executive pay gap of 333 to 1. Meanwhile, Bureau of Labor Statistics data show that the average salary of roughly 250,000 U.S. CEOs is a modest $200,000, which puts the so-called executive pay gap at only 4 to 1.

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Then there's the women's pay gap — another big Hillary theme. It's a 77-cents-on-the-dollar myth. If you account for key factors such as education, choice of industry, hours worked, experience, and career interruptions, the difference between average male and female wages shrinks to 5-to-7 cents on the dollar, according to Romina Boccia of the Heritage Foundation.

Diana Furchtgott-Roth of the Manhattan Institute adds that women today earn 57 percent of bachelor's degrees, 50 percent of master's degrees, 51 percent of doctorates, and nearly half of law degrees. Meanwhile the unemployment rate of adult women (4.9 percent) is lower than that for adult men (5.1 percent).

And Mark Perry argues that if you factor in fatal occupational injuries, such as for logging, roofing, and mining, all male-dominated fields, there is no female pay-equity difference at all.

As for taxing rich people, the Wall Street Journal reports that the top 20 percent of earners pay 84 percent of income taxes, and that the 3 million in the top 1 percent, who make about 17 percent of total U.S. income, pay nearly half the income tax. Meanwhile, the bottom two-fifths of earners are net tax recipients.

These are just a few examples of the mistaken numbers and policies that Hillary is promoting. There's nothing pro-growth in this. Instead of JFK, Hillary's going third-term Obama. And that means America will remain in its economic quagmire if she is elected.

t's a pity. Hillary has a great opportunity to provide new leadership and energy to the country and the Democratic party. I'm offering her a challenge, but it looks like she won't take it. That's one key reason why she will be defeated in November 2016.

Commentary by Larry Kudlow, a senior contributor at CNBC and economics editor of the National Review. Follow him on Twitter @Larry_Kudlow.