Mr. Larry kudlow, and his coauthor, brian domitrovic, the associate professor and chair of the department of history of the sam houston state university. And the two of them worked on the book together, and they will be talking about it together. And were so thrilled and so honored to have you both here. Thank you for coming. And i should mention also, larry lives across the street and he is a regular customer here at the corner bookstore and has been for years. That makes it so much so special, and so personal. So, please join me in welcoming larry and brian. Thank you. [applause] larry kudlow thank you very much. Appreciate it. Are we on both mics . We welcome cspan, by the way. Thank you for covering this, appreciate it very much. So, yeah, its true im larry kudlow and im a local. When penguin and random house started organizing this thing which one . That works . This one doesnt sound great but well do what we can. Penguin and random house said, a while back when we got this thing written and published, its good to have a couple of local bookstores. I said ahha, across the street. , its a terrific idea. We have done tons and tons of media. People have been wonderful to us. A lovely oped piece in todays wall street journal. This is my coauthor and great friend brian domitrovic. ,heres the curator or the head associateter, senior of the Laffer Center and longtime friend of mine. His prior book was all about the classical supply side revival going on, and he is a harvard trained historian. In fact as ive said before, his historiography is the glue that held this entire book together. What i want to do is read a few excerpts from this thing to get a feel for it. And brian will then speak of whatever he wishes to speak about it and then, well enjoy some wine, cheese, whatever it us there. I want to begin with this real simple. The underscore to the the underheading to todays oped piece that the journal kindly published was a return to j. F. K. s rising tide model. And then underneath it says, kennedy and reagan both spurred bipartisan tax cuts and that is just what is needed now. Anything, anday you may disagree with me, and i appreciate that. I love disagreements. Ive been in the disagreement business for a long time. Tv and radio. Im used to that as long as its civil. The very essence of this book is that first john f. Kennedy, and then 20 years later, Ronald Reagan, both used lower marginal tax rates as well as a sound dollars to revive moribund economics. This is not something from the 18thcentury or the 15th century. This is something from recent times in the 20th century. And our argument is, we have experienced a long, dry spell, the last 15 years, frankly, under republicans and democrats, president and congress, poor Economic Growth. Very poor growth. And that is one of the points that we make. You can draw whatever conclusions you want to draw, but our intent here is not to write a politicized book. We dont really mention the current election but to just raise history. We can learn a lot from history, and one of the great things about history is when you forget history, you forget that john f. Kennedy, who, i would argue was the greatest democratic politician in the last 50 or 60 years i speak myself as a former democrat in my long dark past. John f. Kennedy was in fact the first supply side. First supply sider. He was a pioneer. You have to go all boy back to the 1920s, and that was a long time ago. But kennedy was responding to very poor Economic Growth during the eisenhower years where there were three recessions. And kennedy felt, having won by a cats whisker in 1960, that if he didnt produce growth, in fact he talked about 5 growth during the campaign, that he would lose in 1964. And so, he was looking around for things that would get the economy out of the doldrums. There were three recessions during the eisenhower years and the Unemployment Rate was increasing up to 7 . I will just read a couple of excerpts from the book and i hope you get a flavor of what we are talking about. Fortunately, we have a model to follow as we seek return to our nation to Economic Growth. It is the john f. Kennedy, Ronald Reagan model. It is the model of getting the government restrained and modest in its two areas of Economic Policy, fiscal and Monetary Policy. Both kennedy and reagan identified substantially cutting income tax rates and getting the dollar strong and stable as the specific policy that would let the private sector, which is to say the real economy, thrive. We need that. We need that. Aware thatare well reagan was a tax cutter. He had to deal with the horrible stagflation, weak growth and eye high inflation of the 70s and 80s which came to an end the first years of his presidency. Some of us are aware that bill clinton used some of that model to foster prosperity in the decade after Ronald Reagan. With a republican congress, gains andt capital was a proponent of independent of free trade. What is generally not known or at least not remembered, the subject of this book, that president john f. Kennedy in early 1960s not only used but largely pioneered the exact same model. Kennedy. He came to office during a period in which growth was only a little better than today, and his own presidency launched the u. S. On one of the greatest and longes economic booms in our nation is history, using the mix of tax rates and a strong dollar. And it was 5 Economic Growth per year between 1962 and when it ran out of gas and policies changed in 1969. If americans had known this history, we probably would have tried the j. F. K. Reagan policy mix years ago in our slow growth 2000s. We would have cap tax rates low, maintained the strong dollar, and yet, this history has been obscured. Todays liberals and progressive act as if tax rates at a and a meaningful dollar are shockingly far right policies. They were never put into practice in 1960s and failed in the and could only work in a 1980s dream world. But it was democrat kennedy who launched those policies. That by itself i think is a great factoid from the book. Let me read you just couple of quotes. We were recording a long radio interview with my great pal, john bachelor, who is going to be here at 11 00, and he actually found a tape with kennedys boston accent. A great famous speech kennedy made in december of 1962. Very famous speech, which really was the breakthrough of his new policies. In short, it is a paradox of the truth that tax rates are too high today and tax revenues too low, and the soundest way to raise revenues in the long run is to cut rates now. The reason is that only full employment can balance the budget and tax reductions 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. That was j. F. K. In 1962. December. Ok. Now, let me turn the clock forward and Ronald Reagan comes into office. I gratefully served as one of his budget deputies, long time ago. On february 18, 1981, a month into his presidency, reagan gave a speech to the nation and he announced he was seeking the 101010 tax rate cut. 30 across the board tax rate. Kennedys was roughly the same. 30 across the board. So, we skip over two decades. Now, heres reagan. Back when Calvin Coolidge cut taxes across the board the , governments revenues increased. When jack kennedy did it, his economic advisers were all telling him the government would lose revenue and the government gained revenue. Its the reality. So they made quite a sizable financial error. Jack kennedys line about it was a rising tide lifts all boats. End quote. And this is what we believe the tax proposals that we have made are aimed at. That is reagan in almost the identical words of john f. Kennedy before. And finally, last quote from reagan, can you cut taxes and fight inflation by so doing this . I very much believe you can. Let me just read you something. Our true choice is not between tax reduction on the one hand and the avoidance of large budget deficits on the other. An economy stifled by restrictive tax rates will never produce enough evidence to balance the budget, just as it will never produce enough jobs or profits. And heres reagan quoting, quote, john f. Kennedy said that back in 1962 when he was asking for a tax decrease, cut in tax rates across the board. And he was proven right. That is reagan. And before that its kennedy. And i just want to say this for the umpteenth time. Kennedy, the democrat, reagan in , the republican. And as the underheading in the paper this morning, kennedy and reagan both spurred growth through bipartisan tax cuts. That is just what we need now. [applause] so, it has become something of a career among critics to blame reagan, to bring me, to blame Arthur Laffer, to blame jack kemp, to blame a whole lot of people who contributed to this story. Im fine with that. Go on and blame me. Im a big boy. I can take it. Im very thinskinned but if you want to blame, blame john f. Kennedy. He started it. In great fashion. And unfortunately, he was tragically assassinated. But it went into place. It succeeded. Reagan borrowed it. It succeeded again. And all i want to say is we have an election here, this book is not about the election, but whoever, somebody needs to form a bipartisan coalition, reach across the aisle as kennedy did and reagan did. Kennedys top economic adviser was a republican, treasury secretary doug dillon. Think of that. We need to do the same thing. Thats all i ask. Stop yelling, stop cursing, stop snarking, stop being mean. Just look at the facts and read some history and you can see there is a way out of this slump that america unfortunately finds itself in. That is our message. And ill turn it over to my pal, brian domitrovic. [applause] brian larry and i had a great time writing this book. A lot of it right here in new york city. Across the street. And a lot of events in this book happened in this neighborhood. I just walked past the Jacqueline Kennedy onassis reservoir. J. F. K. s favorite crash pad is down the street, the Carlisle Hotel. That is where he got a couple of his economic reports, including the report that said, dont you dare cut tax raise every. That was paul samuelson. He turned his back on that. And the Economic Club of new york is right down in the canyons, not too far from here. One of the things we wanted to do in this book was kind of correct by means of evidence this impression that the tax cut of 1964 was keynesian, that kennedy was some kind of demandside pump primer and not a supplysider. I have never really understood that given his cut was a cut in marginal tax rates. We werent sure why the argument had traction, so we wanted to identify the really Important Role that douglas dillon, his treasury secretary, played in 1960 2, 1963, and 1964. Id like to read you a president ial memo from the treasury secretary. Usually, these things are dry as dust. But in the context of what we are talking about, when kennedy actually turned on his keynesian advisors, this memo turns out to be really important. Keynesiansof these saying you have to increase government spending, get off the Gold Standard. If you have a tax cut, only a temporary tax cut because we have to preserve the current tax stream. John f. Kennedy writes the billing wrote to the president that any significant adaptation of government policy aimed at stimulating economic expansion should be presented in a clearcut simple package with consensus on these points. One, if there is to be a tax cut, it should be oriented toward improved business incentives, should be of a permanent and reform character, reduction centered on lower bracket personal incomes would be regard as fiscally loose bread and circuses. Although some companion action would be understandable. Two, a deficit should be presented as the cost of essential tax reform. Tight ceilings on expenditures should be announced. It is also very important that deficits be financed out of current savings as opposed to the Federal Reserve. And three, the government should declare it is willing to allow Interest Rates to rise if combined demands from the private sector and a large government deficit create upward rate pressures. And kennedy took every point of that advice. He said, yep, im not going to do the spending. Im going stop the monetary looseness. I am going to stop trying to finesse the Gold Standard. Well cut tax rates and the rates that matter. The rates that have incentives, especially the highest rates in the tax code, and thats going to draw capital back to this country, bring bigtime growth , and save the Gold Standard because of the demand for the dollar. So if i might read one more passage. A lot of people have asked us this afternoon, why was kennedys policy in the 1960s forsaken . Why wasnt it the policy through the 1980s . Why did Ronald Reagan have to resurrected . Why did we have stagflation in the 1970s . I think actually unfortunately one of the reasons we had stagflation in the 1970s is that john f. Kennedys opponent in the 1960 election became president in 1969. Nixon kind of studiously made sure he didnt do j. F. K. s policy, and he kind of reversed policy mix of going awful the Gold Standard and raising the Capital Gains tax rate and regulation and spending. So heres an interpretive passage we write about the 1960s and the assassination of 1970s. November 1963 provided an enormous shortterm boost to the cause of the tax cut passed in 1964. It was fatal to it in the long term. The assassination was so shocking that the opponents of kennedys legislative agenda had to submit on at least one kennedy goal out of due respect for the slain leader. The obvious choice was the tax cut. Once that was enacted, all leverage was lost on blocking civil rights, kennedys other big legislative initiative in. In the long term, however, kennedys absence after 1963 deprived the tax cut of its principal exponent, articulate r, and enforcer. Tone, hisal commitment to thinking threw the real economic effects of a tax rate cut, while unencumbered by the intellectual paradigms of university economics, flawed as they were. The supreme standing in the native ambition kennedy possessed that drove him to solve the problem had constituted reason and credibility behind the administrations commitment to seeing the tax cut through. With kennedy gone, the mechanism of the tax cut that kept the logic keene and motive force strong was gone too. , no matter the phenomenal quality of the prosperity it unleashed. Larry kudlow in other words, it did not take johnson long to undo the best damn policy he was associated with. And for a lot of Different Reasons relating to the war and politics and whatnot, he raised tax rates. He managed to put the original rate from 70 to 70 and began to unhinge the dollar and as i said, this is a bipartisan, nonbipartisan book, so the next president , richard nixon, who i have met many times and his family is dear friend of mine , but as once said to me when he was out of office in downtown you dont think much of my , economics. I said, no, sir, i really dont. So, nixon raised taxes. And nixon unleashed the dollar, unhooked it from any gold or any other monetary discipline, and imposed massive regulations on the economy, including wage and price controls. So, again, in a bipartisan way, democrat and republican got it right and we had a democrat and republican who got it wrong, and now the question is, how is the balance going to wind up tipping . I cant answer that question. My crystal ball is no better than yours. But its important. The other point that brian read, which i love, really, doug dillon, a very wealthy banker, his father, clarence dillon, founded the old dillon reed which for many years was among the widest of the wide shoe of investment banks in new york. Doug dillon had just about as much money as joe kennedy and john f. Kennedy and traveled in very high social circles. In fact, even higher than the kennedys. And so, kennedy could not stare him down. He had to listen when dillon spoke, after all, kennedy put him in office as the treasury secretary. I thought that was pretty good. Sometimes you have to be able to make people listen to you, and in this case, it was money and social standing. Me, id take it any way i can get it and good policy is good policy. But the main point here is, this i justa partisan book, want america to get moving again. We have to turn less than 2 growth over a decade now back to 3 to 4 growth. To get there, well have to take strong remedial actions, particularly on business tax cuts, to grow the economy at 5 or 6 for several years, in order to get us back on track. Kennedy and reagan showed, proved, historically it can be done. It can be done. Now since i love america, believe in democracy, believe we can get it done. Well see. Thats really our story. Happy to take your questions. Even your criticisms. Yes, sir. Thank you. I never before associated kennedys time at the Carlisle Hotel with Economic Policy. [laughter] i was recently listening to an interview with a scholar who has a book out about the decline of people participating in the work force, particularly men, working age who are not even looking for jobs, just out of the labor force. Im wondering if this development that he argues is very significant, whether that would limit the effectiveness of a new policy of going to another round of these sorts of tax cuts. Larry kudlow it goes the other way. As he argues in his piece, theyre probably two key issues here. One is a lack of Economic Growth. Want to create jobs . Grow. You want to lower budget deficits . Grow. You want to help solve poverty . Grow. Want to employ more people . Grow. There are other issues that nick raised. Federal policies, regarding small entitlements and other regulations, have been a disincentive to work. Thats too bad because we want to get everybody able bodied to work. And i saw the same argument today. Brennan of the Federal Reserve board made a similar argument how low the employment is which is the backbone of the eco