HAPPY 25th ANNIVERSARY, KEMP-ROTH! Here’s an excerpt from the Washington Times’ tribute:
The Congressional Budget Office, for example, believed the money supply had nothing whatsoever to do with inflation, and that cutting tax rates would add fuel to it. CBO Director Alice Rivlin said output would fall if tax rates were cut, because workers could work less and still get the same after-tax income.
A commonly held view at the time was that it would either take decades to bring inflation down to tolerable levels or another Great Depression. Arthur Okun of the Brookings Institution reflected the views of most economists when he said in 1977 that the economy would shrink by 10 percent for every 1 percent fall in the inflation rate.
To his credit, Ronald Reagan rejected the conventional view and supported Kemp-Roth, making it his principal campaign issue in 1980. Jimmy Carter, who endorsed the establishment’s thinking, rejected tax cuts as inflationary. He said inflation was just due to a lot of bad luck