There was a time that presidential fiscal policy was used as a weapon to promote economic growth.
I can go all the way back to President Kennedy, who promoted 5 percent growth. And he slashed taxes to get there following the stodgy, high-tax, multiple recession Eisenhower years.
President Nixon promoted growth the wrong wayby devaluing the dollar, gunning the money supply, and imposing wage and price controls. At least he did want growth: It was just the wrong growth.
Ronald Reagan was the quintessential growth president. Slashing taxes, de-controlling oil, deregulating large swaths of the economy, and giving Paul Volcker the ground to stand on in order to fight inflation.
President Clinton had a rough first couple years with low growth, high taxes, and Hillarycare, but he wised up in his second term and slashed the capital gains tax, balanced the budget, and reformed welfare all in partnership with the Newt Gingrich-led Republican Congress.
President Obama didn't care much about growth, being a redistributionist and an income leveler. He didn't get it. During the Obama years it was called secular stagnation.
President Trump loved growth. As a former businessman, he always told people, swing from the heels, take big risks, shoot for the moon. He slashed taxes across the board, especially business taxes, and he deregulated everything and gave special support to America's entrepreneurial frackers, who made us energy independent.
Now comes President Biden.
Mr. Bidens new budget continues his tradition of big-government socialism. He is going to spend big, tax big, and regulate big. The only thing he wants to limit is the fossil fuel industry.
Whats so interesting about Mr. Bidens budget is that for all of his left-wing approaches, theres no growth. From 2022 out to 2032, in the 10-year budget window, Mr. Bidens plan shows essentially 2 percent growth. More secular stagnation. More of the Obama-Biden neglect of growth.
Mr. Trump was a pleasant interlude, but now climate change, social justice, and critical race theory are all more important than growth or incentives for growth.
Really, if I believed in his socialist model, I would want to argue its superiority to free-enterprise capitalism by showing off growth. One of the things that made China a world player was Deng Xiaoping liberalizing the economy. China grew in double digits and became a big shot.
Mr. Biden doesnt want to be a big shot. He would rather tax successso much so that in his wealth tax program hes triple-taxing success.
How? First, by raising the personal income tax to 40 percent from 37 percent; second, by raising the capital gains tax to 40 percent from 24 percent; and third, by slapping on a 20 percent surtax for the wealthiest and most successful Americans, including taxing unrealized capital gains.
This is nothing if not confiscatory taxation. If legislated, it will demoralize the animal spirits of all the inventors and innovators and risk-takers in the economy that made America great. Not growth, stagnation. Not growth, redistribution. Some of the numbers are illuminating.
Mr. Biden would raise taxes by $2.6 trillion over the next 10 years. That is a very big number. By the way he raised the corporate tax to 28 percent from 21 percent. Hes also intending to slap a minimum tax on the foreign earnings of U.S. corporations.
This years deficit comes down as pandemic emergency payments presumably come to an end. After that, the deficit gradually rises over the next 10 years, to $1.8 trillion from $1.4 trillion.
Debt held by the public will rise by $14.7 trillion, moving from $24.8 trillion to $39.5 trillion. That would be 107 percent of GDP. Spending would hold at the historically high 23.4 percent of GDP; the 50-year average is 20.9 percent. The priorities are all wrong.
In the next year, for example, defense spending is only up 4 percent, which despite Mr. Bidens phony budget assumptions, in the real world will be about 6 percentage points below inflation.
Meanwhile non-defense discretionary spending goes up 9.5 percent, more than twice the rise in security. And the green new deal wins again in Mr. Bidens budget.
The EPA spending is up 29 percent. Energy department 15 percent. Interior department 19 percent. Were taking green new deal subsidies, environmental justice, equity and racial justice. This is truly a woke budget.
It is also a pro-inflation budget, because deficit spending goes on forever. That will put great pressure on the Federal Reserve to finance it with exorbitant money creationexactly the combo thats generating the Biden inflation crisis in the first place. Theres no change.
I recall my great friend and mentor, Art Laffer, saying, If you tax something you get less of it,
Well, Mr. Biden is taxing virtually everything, and that includes his inflation tax. Everybodys going to lose, but middle-income working people will wind up losing the most.
Because the dollars in their purses will be worth vastly less, theyll buy fewer goods and services. There will be fewer job opportunities because investors wont invest and new-business starts wont happen.
Technology and innovation will be blunted. Free-market enterprise is all about incentives. Socialism is all about redistribution: Taking from Peter to pay Paul. Enhancing the power of government and its central planners.
This is a big-government, socialist budget. It is anti-growth. Save America. Kill the Bill. Pray the cavalry comes soon.
From Mr. Kudlows broadcast on Fox Business News.