There may be no man alive who has done more damage to America’s understanding of economics than Art Laffer. So, of course, Donald Trump is now awarding him the Presidential Medal of Freedom.
The White House press release calls Laffer the “father of supply-side economics,” the conservative doctrine that emphasizes growth through tax cuts. First, he’s not really the father of this movement. Its original intellectual force was economist Robert Mundell, a quirky Nobel prize winner under whom Laffer studied. Laffer did go on to become the idea’s most important preacher and popularizer, though. He’s best known for observing that if the government raises taxes too high, it will eventually collect less revenue, because people will begin to work and earn less. Thus, in some circumstances, tax cuts could theoretically pay for themselves by spurring the economy. He wasn’t actually the first person to notice this, but no matter. One night at dinner in 1974, he illustrated the point to Dick Cheney and Donald Rumsfeld by drawing a curve on a napkin—which is why we now call the concept the Laffer curve.
The Laffer curve is a somewhat useful observation. Most economists agree that there is a point of diminishing returns where raising taxes becomes counterproductive. But to reach it, you probably have to push rates really, really high—possibly to somewhere around 70 percent. Laffer has instead spent years preaching the idea that almost any tax cut for businesses and the rich could potentially pay for itself, an intellectually corrosive notion that has now become the conceptual backbone of the Republican Party’s entire economic program. Trump’s Treasury Secretary Steve Mnuchin insisted the administration’s own tax cut would cover its own cost (Laffer , who advised Trump’s campaign in 2016, himself said the cut to the corporate rate would pay for itself “many times over.”) Mitch McConnell said much the same. Predictably, it wasn’t true.
Spreading the idea that tax cuts are self-financing wasn’t Laffer’s only sin against economics. He’s been personally involved in some disastrous public policy experiments, such as the notorious Kansas tax plan that wrecked the state’s finances. And recently, he and his longtime friend Stephen Moore, the conservative pundit Donald Trump nearly nominated to the Fed, co-wrote Trumponomics, a book-length tribute to the administration’s policies. Now he’s getting a medal for his services.
