Lifting All Boats

President Bill Clinton last week in the New York Times reviewed the fourth volume of Robert Caro's on-going series on LBJ.  Among the many interesting things said was this assertion:  "...the end of broad-based economic growth that had indeed 'lifted all boats' in the early ’60s, made it harder and harder to win more converts to the civil rights and anti­poverty causes."

I remember reading something about this in Steve Hayward's great Politically Incorrect Guide to the Presidents:  From Wilson to Obama.  The "lifted all boats" line is an aphorism from a speech JFK gave to the Economic Club of New York in the fall of 1962.  Here is the pertinent part of that speech:

The current income tax system siphons out of the private economy too large a share of personal and business purchasing power. . . it reduces the financial incentives for personal effort, investment, and risk-taking.”

Our true choice is not between tax reduction, on the one hand, and the avoidance of large Federal deficits on the other. It is increasingly clear that no matter what party is in power, so long as our national security needs keep rising, an economy hampered by restrictive tax rates will never produce enough revenue to balance our budget just as it will never produce enough jobs or enough profits. Surely the lesson of the last decade is that budget deficits are not caused by wild-eyed spenders but by slow economic growth and periodic recessions, and any new recession would break all deficit records.

In short, it is a paradoxical truth that tax rates are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now. The experience of a number of European countries and Japan have borne this out. This country’s own experience with tax reduction in 1954 has borne this out. And the reason is that only full employment can balance the budget, and tax reduction can pave the way to that employment. The purpose of cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus (Emphasis mine).

So Bill Clinton implicitly praises JFK's cutting taxes which, in his words, led to "broad based economic growth" in the early 60s.  Regarding the basic economic policies Kennedy and his advisers enacted, especially those in the bolded part, the same policies today would be completely rejected by the Democratic Party (Clinton's presidency included).  Here is Steve Hayward in a post on this subject back in June of 2011:

Any Democrat who talked this way today would be drummed out of the party, and would make [Paul] Krugman’s head explode. (Hey, there’s. . . never mind.) Instead, Krugman, Robert Reich, and company are starting to wax nostalgic about the 70 to 90 percent marginal income tax rates of the 1950s, which they argue didn’t retard economic performance at all, thereby willfully forgetting the critique the growth liberals made of the slow-growth Eisenhower years.

Interesting how the times change.