Political Cortex: Brain Food for the Body Politic

Forces of the right, particularly of the stringent Ayn Rand style libertarianism, regard such action as socialism per se. U.S. Depression historians such as Arthur Schlesinger Jr. and others argue that such action is no more than mixed economy activity.

According to the prevalent international model of what constitutes socialism as well as the number one listed definition in American dictionaries, a government reaches the level where it is termed socialistic only when the operational economic tools of that body are dominated by public rather than private control.

Due to needed reforms during the Roosevelt Administration that brought millions of Americans out of hardship status, there were more cars and houses sold and, while the total income of those at the very top declined, there was a notable leveling process that occurred during the New Deal period that extended to the Fair Deal under Harry Truman's leadership and the New Frontier of John F. Kennedy.

Yes, there was a popular two term Republican president who served in the eight years between Truman and Kennedy.  It is interesting to note that Dwight D. Eisenhower, who functioned except for his first two years in office in a divided government with Democrats controlling the Congress, did not see fit to tamper with the federal tax structure.  

Democrats such as Kennedy criticized the Eisenhower Administration economically for another reason, high interest rates, which were imposed to keep a lid on inflation.  Democrats believed that growth should have been emphasized more and the tight money strategy should have been deemphasized.

The significant element to note regarding tax policy under both Eisenhower and successor Kennedy was that, while federal income tax rates extended as high as 91 percent, few Americans actually paid that rate due to insertion of deductions.  These deductions generated a money flow with a resultant ripple effect that redounded to those levels below  top rate payers as the middle class flourished.

It is a truism that has been supported with substantial economic data that during this period of Eisenhower-Kennedy governance when the top tax rates were highest, the country as a whole prospered to a greater degree.  

There were more millionaires per capita created during this period and fewer people falling below the poverty line than was the case when Ronald Reagan governed.  Under Reagan more billionaires were created at the same time that the ranks of the impoverished and homeless dramatically increased.

Do not expect to hear anything on the order of a discussion of tax policy during the Eisenhower administration of the fifties or Kennedy in the sixties from John McCain.

John McCain, it will be recalled, said during one of the Republican presidential debates that he "did not know much about economics."

On that point, believe him!