Wednesday, June 15, 2005

Fascinating Discussion on the Origins of the Laffer Curve

I got a link to this through's email updates. This is a darn interesting clarification on how the Laffer Curve came to be a staple of the 1980's economic policies.

in the afternoon Rumsfeld's secretary advised me that he had to cancel because the President wanted him at that hour, but that I should meet with his deputy, Dick Cheney.

I'd also known Cheney from his OEO days with Rumsfeld, and when I got him on the phone I suggested we meet at the Two Continents cocktail lounge in the Hotel Washington, just a block from the White House.

When we met there in a booth at 4 p.m., the only other person to join us was Grace-Marie Arnett, who had been press secretary to Sen. Pete Domenici and who Cheney later hired as deputy press secretary in Ford's 1976 presidential campaign. Oddly, both she and Cheney recall Laffer drawing the Curve, but he insists he has no recollection of having done so. It no doubt was routine to him, but not to the rest of us.

Really all I remember taking place was his drawing the Curve. This occurred with Laffer unable to get Cheney to see how two tax rates would produce the same revenue, one at a higher lever of production than the other. The paper-napkin sketch obviously impressed him because he called me a few weeks later at the Journal to tell me Rumsfeld had asked Treasury Secretary Simon to prepare a tax-cut proposal for presentation in January with the budget and the President's economic message.