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Ralph Reiland

Ralph R. Reiland: Trickle-down disbelievers defy facts

| Sunday, Jan. 14, 2018, 9:00 p.m.
First lady Nancy Reagan and President Reagan walk on the White House South lawn in December 1986. (AP Photo)
First lady Nancy Reagan and President Reagan walk on the White House South lawn in December 1986. (AP Photo)

A business acquaintance of mine, a hardworking small-business owner, recently asked me,“Why'd you write the column on the successes of trickle-down economics during the Kennedy administration?” It “didn't work,” he said, authoritatively. “Everyone says it didn't work.”

“I don't know why they think that, but they're wrong,” I replied. “Tax cuts and supply-side economics worked during both the Kennedy and Reagan administrations in delivering increased and widespread prosperity.”

Maybe the skeptics are ideologically reluctant to acknowledge that financial incentives and tax cuts matter, or hesitant to recognize that businesses are the key creators of jobs and income, the essential engines of social and economic betterment. Or, more broadly, perhaps the cynics are disinclined to concede that capitalism and private markets have created the world's highest standards of living for the largest numbers of people.

In and just after the Kennedy years, an inherited stagnant economy was re-energized by pro-growth business tax cuts in 1962 and across-the-board income tax cuts in 1964 that together more than doubled the rate of U.S. GDP growth, widely boosted employment and reduced poverty. GDP growth, 2.1 percent from 1944 through 1960, exceeded 5 percent annually for nearly a decade following Kennedy's tax-cutting stimulus program, producing millions more jobs.

The number of Americans living below the poverty line, per the U.S. Census Bureau, declined by millions following Kennedy's economic revitalization program, from 39.8 million in 1960 to 36 million in 1964 and 26 million in 1979. Correspondingly, unemployment declined steadily from 1961 through 1963. Similar results followed Reagan's tax-cutting initiatives, with growth expanding and the jobless rate dropping by half, from 10.8 percent in 1983 to 5.5 percent when Reagan left office in 1989.

Nevertheless, my business acquaintance was correct in saying there's no shortage of people who maintain that supply-side economics and pro-growth tax cuts don't work.

Stated Muhammad Ali, “Tolerance and understanding won't ‘trickle down' in our society any more than wealth does.”

Hubert Humphrey, Democrat senator, vice president and presidential nominee, on trickle-down economics: “If you give the horses some hay, somehow the sparrows will have something to pick at later.”

Democrat presidential candidate John F. Kerry: “I believe every worker in America is tired of being trickled on by George W. Bush.”

Democrat presidential candidate Hillary Clinton: “Throughout the 1980s, we … found that while prosperity does not trickle down from the most powerful to the rest of us, all too often indifference and even intolerance do.”

Pope Francis: “Some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion has never been confirmed by the facts.”

Ralph R. Reiland is associate professor of economics emeritus at Robert Morris University and a local restaurateur (

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