“When President Ronald Reagan was inaugurated in 1981, policymakers and economists were flummoxed about how to drag us out of the mire of high inflation and unemployment,” writes Andrew Spiropoulos, who serves as the Milton Friedman Distinguished Fellow at OCPA. “Most so-called experts thought we needed higher taxes, more government programs, and robust regulation to return us to prosperity. With regard to larger questions of global economics and politics, most of these experts argued that socialism was both economically and morally superior to capitalism. Does this all sound familiar?”
It does, especially if you’ve been paying attention lately to Oklahoma’s organized Left (liberals, progressives, socialists, or whatever they’re calling themselves these days). But as Spiropoulos reminds us,
By the end of the decade, and certainly by the end of the millennium, the experts’ worldview lay in tatters. Reagan, guided by an economist named Arthur Laffer, did precisely the opposite of what the experts demanded. He cut tax rates while reforming the code, shut down failed programs, and put a leash on the regulators. Margaret Thatcher did the same in Great Britain.
What were the results? Instead of the disaster predicted by the experts, we experienced a remarkable 25 years of nearly uninterrupted growth—a generation of economic prosperity. …
Socialism could still win votes in elections or the faculty lounge, but as a serious intellectual movement it was, and is, dead.
As policymakers in Oklahoma’s center-right government consider income-tax reductions to stimulate the economy, they can look not only to Ronald Reagan, but also to John F. Kennedy, who believed that income-tax cuts would spur economic growth—and even provide more revenues for the government (see clip below).
Moreover, they can look to the man who “passed the largest income-tax cuts in state history”—Brad Henry (see clip below). Even while continuing to spend increasing sums of money, Gov. Henry and his ink pen saw to it that Oklahoma’s personal income tax was reduced from 6.65 percent to 5.25 percent—a stunning 27 percent reduction. Would those income-tax cuts stimulate the economy? “I believe that they will,” said the governor, who majored in economics at the University of Oklahoma. And regardless of any short-term effects on the treasury, Henry lieutenant Scott Meacham assured us, “tax-rate cuts like that provide a long-term stimulus.”
In short, Spiropoulos says, “Friedman and Hayek were right about how the world works. Reagan was right about what our nation needed to recover. And, when it comes to Oklahoma’s future, we’re right now.”