Memo To: Jonathan Chait, The New Republic
From: Jude Wanniski
Re:'Jude the Odd'
[The cover story of the 3/31 New Republic is about my influence, for good or ill, on the state of the nation in general, via the GOP in particular. You should read the article first by returning to the home page and clicking on it. The memo that follows corrects some of the errors or misunderstandings that appear in the piece, which on the whole is quite good, for which I thank the author, Jonathan Chait, and the magazine*s editor, Michael Kelly, who I believe is one of the top five journalists in America today.]
Thanks for sending me early copies of the March 31 issue. It's the first time I've made the cover of a periodical of significant influence. The piece is very good, broadly accurate, capturing my eccentricities with just the right spirit. As a liberal, with little experience inside the mechanisms of the Republican mind, you can't be expected to know all the intricacies of Republican politics. The piece overall shows the beginnings of insight. My thanks to you and Michael.
1. I coined the terms 'dynamic' and 'static' analysis about the same time I coined the term 'supply-side economics,' to help explain the Laffer Curve. If you understand my ice cream cone story of static analysis, you understand that if the tax rate that buys public goods is too high, revenues will fall, and if you cut the price of an ice cream cone from $1000 to $1, revenues will increase.
2. When I've called myself the most influential political economist of the last generation, it has been tongue in cheek, because nobody else I know of calls himself a political economist in the United States. They do in the UK, but not here.
3. You pinpoint my falling out with conservatives as the moment I fell in love with Farrakhan. It was long before I met Farrakhan that I became a problem for conservatives, including Bill Kristol. The split was over national security. When the Berlin Wall came down, I abandoned my old Cold War pals and became a post-Cold War pacifist. Bartley and I barely have been on speaking terms since 1991, mostly because of this split over security issues. In late '94, Gingrich and I stopped talking to each other, because I argued tax cuts should precede spending cuts. And, as a Dole advisor, I opposed Kristol's health-care strategy of straight-out opposition and argued that the GOP had to develop its own health-care plan in order to beat Clinton's. Which Dole did, if you want to know.
4. The only major error in your piece is in blaming me for the rift between Steve Forbes and the Christian Coalition. Steve and Dal Col rejected my advice that they bring in Marc Nuttle, who had been Pat Robertson's campaign manager in 1988, and had successfully contested Iowa. Nuttle knew Reed was going to murder Steve on behalf of his guy, Dole. Steve's handlers, the Jesse Helms boys, had never even been to Iowa, but were essentially in the race to make a few million bucks at Steve's expense. When Reed pushed the buttons and the Christian Coalition folks began calling everyone they knew in the state — whispering that Steve was 'pro-abortion' — Steve's standing in the Iowa poll dropped 20 points in five days. Steve and Dal Col held a press conference, blaming the Christian Coalition. Only after they pooped all over Reed did Dal Col telephone me to tell me what had happened. All I did was tell the New York Post that Reed and the Christian Coalition should be ashamed of themselves for spreading such stuff about Steve. Even then, Nuttle offered to go into Iowa and use his prestige with the Iowa evangelicals to win back Steve's support, but Steve and Dal Col were told by Carter Wrenn and the other Tarheels that they would quit if that happened.
5. The criticism of Kemp's performance in the campaign came from the old Cold Warriors, the same folks who made sure Colin Powell did not get into the race. The "bombers," as Powell calls them. Remember I said my split with them came when the Cold War ended. They were horrified at the mere prospect that Kemp would get close to the presidency — fearful he would not go along with their plans to look for new monsters, as Powell put it.
6. The macro-economic views of Lyndon LaRouche 20 years ago were competitive with the ideas of the Keynesians, monetarists and the supply-siders. He had a lot of conspiracy theories in his views of the political forces at work, involving the Eastern Establishment and the Atlanticists. But these went to the causes of the economic and financial turbulence in the world. His solutions were respectable. His monetary solution: Refixing the dollar/gold price at an appropriate level — which Alan Greenspan would do in a minute. His fiscal solution: Direct government spending to areas of promising technology, especially nuclear fusion. The funds could be raised through bond finance, which would cost little because interest rates would fall to gold-standard rates. The return on investment would pay for at least the interest rates to float the bonds. My debate with him in favor of the Laffer Curve was in relation to his version of national industrial planning. (LaRouche preceded Robert Reich on this, but both were preceded by Mussolini and the early New Deal. I bet you didn't know that.) If tax rates are suboptimal because they are too high -- in the same way that the price of ice cream cones @ $1000 may not produce even $1 in revenues — then a simple reduction in marginal rates would increase commercial activity, increasing tax revenues at least sufficient to pay the interest on the bonds. In other words, is it wiser for the government to raise $1,000,000 via bonds and invest it in nuclear fusion, or to invest it in the broad market by lowering tax rates then in the 70% range? The essential difference between us was the Laffer Curve, which you characterized as crazier than his idea, but of course you did not bother to ask what his idea was, or is. You were told he was a nut, and he was, and is, but when conventional wisdom cannot deal with a crisis, the nation must turn to its nuts, until it hits upon one who has the solution.
7. You assert that the tax-cut idea produced the deficits. Can you find me an economist who is willing to say that the 70% tax rate which Reagan encountered in 1980 was just right, and that it is the rate to which we should return in order to balance the budget?
8. When you say I could not resist giving an interview to warn against Reagan advisers who were whispering in his ear, I did so after I had already been sealed outside the campaign. When you say "Reagan's furious staff quickly cast him out," your sequence was in error. Jeff Bell and I were part of the Sears team, remember, and when the Old Guard Californians got rid of Sears, then Bell and I were cast outside the tent as well. The only way we could regain influence was to do so through the press — and Alex Cockburn of the Village Voice was friendly enough to do the lengthy interview that ran in the LATimes and Washington Post Outlook section.
9. There was never any congressman who said I threatened to turn the WSJournal editpage against them if they voted against Kemp-Roth. A scurrilous political adversary cooked that story up years after I left the Journal. You will not be able to find anyone at the top of the Journal who ever heard such a story during my tenure, because it never happened. If it had, at least Bartley would have heard about it, and I would have been fired on the spot. There are some ugly people out there. You didn't say I was fired for pamphleteering, which I appreciate. If you would like to see a letter I asked Ray Shaw send me, to the effect that the rumors of my firing spread by evil people were incorrect. In fact, I had for months pleaded with Bartley to find a replacement for me, because of the increased appearance of a conflict of interest. When Shaw and several other Dow Jones executives complained to Bartley, I simply resigned, although it was clear to me that Bartley was still prepared to keep me on.
10. You have in the past asserted that Jack Kemp is a puppet and I have been his puppeteer. When you say "virtually every political sentiment Kemp has ever had first belonged to Wanniski," you fail to recognize the nature of the partnership. I supplied him with a steady stream of ideas and he chose those he wished and discarded those he did not agree with.
These are nuances, but because your piece was as good as it was, I thought it worth the effort of smoothing out some of its rough edges.