Wed November 20, 2013
The Economic Legacy Of JFK
At the time of John F. Kennedy’s death in November 1963, an employment boom was beginning.
Stocks were soaring, swept up in the emerging “go-go” era on Wall Street. It was a time when investors were falling in love with mutual funds and conglomerates.
So, what exactly did Kennedy do? As the nation marks the 50th anniversary of his assassination, do the experts credit him with having a lasting economic legacy?
Business editor for NPR, Marilyn Geewax joins Here & Now’s Robin Young to discuss Kennedy’s achievements and effectiveness.
- Marilyn Geewax / NPR: JFK’s Lasting Economic Legacy: Lower Tax Rates
ROBIN YOUNG, HOST:
From NPR and WBUR Boston, I'm Robin Young. It's HERE AND NOW.
And as you have no doubt heard, Friday is the 50th anniversary of the assassination of President Kennedy. The timeline is on our watch, and we'll mark the moments as we go through our regular program.
But today, NPR's senior business editor Marilyn Geewax had an intriguing suggestion: Let's take a look at Kennedy's economic legacy. When the young U.S. senator took the oath to become president, he faced an economy struggling with rising unemployment, slumping profits, depressed stock prices, not unlike President Obama in 2009. But Marilyn says the similarities mostly end right there. By 1963, employment was booming and the economy was growing at nearly 7 percent. So what happened?
Marilyn Geewax joins us. And, Marilyn, start with the president taking office. Economy terrible, 6.8 percent unemployment, very little growth, so what did President Kennedy do?
MARILYN GEEWAX, BYLINE: He came in with a lot of liberal ideas for stimulating the economy. He really wanted to get things going by spending more. So he did things like increase Social Security benefits. He said that would get people to retire earlier and open up some new jobs. Raise the minimum wage, expand unemployment benefits, lots more spending for highways, bridges, urban renewal, more welfare benefits. He was really pushing Congress to get the economy moving by increasing government spending.
YOUNG: So on that one hand, a true liberal who wanted to boost government spending, but you say, wait. It's complicated.
GEEWAX: Yes. It's more complicated than that. So the - at the same time, he also said, we really need to cut taxes. And, you know, it seems odd to us now but at the time, he was being criticized by conservatives who said if he cut taxes it would worsen the budget deficit. So they wanted to focus on spending cuts and then maybe get to tax cuts later. But he argued that if you cut taxes right now, you would boost the economy because it would put money in more people's pockets, and they could go out and spend.
YOUNG: Well, this is amazing on two levels, Marilyn, because first, the conservatives were critical. Taxes were so high...
YOUNG: ...at that point.
GEEWAX: Yeah. Well, that's the thing that's pretty amazing about it. He looked at the tax rates, which were really remnants, in a sense, of World War II when we really needed to raise a lot of money to afford to conduct World War II. And here it was the 1960s. He said it's time to adjust that. So when they cut the tax - marginal tax rate, it was 91 percent. So that, you know, it went down there, but the tax rates were outrageously high. So he pushed for across-the-board tax cuts and, you know, it really opened up this kind of a golden era in the economy.
Now, there are lots of reasons for that. But basically, in the mid-1960s, you had deficits started shrinking, unemployment fell down to 3.8 percent. Basically, if you could stand up and get to a place of employment, you would get that job. It was really easy to find work. So...
YOUNG: But as you were just alluding to, when conservatives point to the Kennedy tax cuts as evidence that cutting taxes can cut deficits. You know, you say - economists say, you know, when they're that high you got nowhere to go but down.
GEEWAX: Right. So that's the controversy in our day and age now is a lot of times conservatives point to those tax cuts and say, see, cutting taxes means that you can - not have to worry about the budget deficit. They'll pay for themselves because you'll ignite growth, and it will all work out find. But an awful lot of economists say that's really not the way it works now, because taxes have been cut a lot.
Remember I just said the highest marginal rate was 91 percent? Well, now it's roughly a third of that. So they say the low-hanging fruits have already been picked, rates have been cut a lot, and that you don't get that kind of bounce anymore. So there's no point to cutting it further.
YOUNG: Marilyn Geewax, NPR senior business editor, you also point out that he laid the groundwork for the eventual passage of the Civil Rights Act and the Medicare program...
YOUNG: ...which opened up health care for African-Americans, which set them on the path to better jobs, more revenue for the country. Fascinating thought as we come up on Friday. Marilyn, thanks so much.
GEEWAX: Oh, you're welcome.
YOUNG: This is HERE AND NOW. Transcript provided by NPR, Copyright NPR.