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Return to Prosperity

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Return to Prosperity

How America Can Regain Its Economic Superpower Status

Threshold Editions,

15 min read
10 take-aways
Text available

What's inside?

A contrarian’s view: What you think you know about taxes and economics is just plain wrong. Be scared.

Editorial Rating

8

Qualities

  • Controversial
  • Analytical
  • Background

Recommendation

Prominent economist Arthur Laffer is a contrarian’s contrarian. He urges trade with North Korea and Cuba, dislikes unions, despises stimulus packages, loves the flat tax and espouses offshore drilling in the Gulf of Mexico (note, though, that the book predates the oil spill catastrophe there). The inventor of the Laffer curve (which says, not without debate, that cutting tax rates for rich people ultimately produces more government revenue) offers evidence for each of his zingers, though he meanders at times, and his points are sure to raise hackles. He issues economic warnings with the intent that “you should be scared,” yet this isn’t a partisan book – Laffer’s informed insights, criticism and praise extend to both sides of the political aisle. He productively draws upon his own professional and personal experiences. When he writes that Americans are leaving high-tax states to move to low-tax states, he notes his own shift from California to Tennessee. Laffer is a supply-side conservative, but he voted for Bill Clinton, and he explains why. getAbstract, which recommends books but takes no political stands (the opinions in the Abstract are the author’s), suggests this analysis to policy makers and students of economics who welcome a curmudgeonly but deeply experienced perspective.

Summary

Warning: Financial Train Wreck Ahead

The U.S. economy is in the midst of a “disastrous trend” of overspending and overtaxing that threatens the nation’s prosperity. After a period of fiscal sanity under President Bill Clinton, Presidents George W. Bush and Barack Obama ratcheted up spending to unsustainable levels. In 2001, the interest on the national debt cost about 6.5% of federal tax receipts. By 2010, it soared to 25%. With presidents and legislators unwilling to show fiscal discipline, unfunded liabilities soared to $65 trillion in 2008. Social Security ($18.7 trillion) and Medicare ($33.2 trillion) accounted for much of that amount, and pensions for military personnel and civilian government employees totaled $2.7 trillion. With federal tax collections at $2.2 trillion a year, a looming liability of $65 trillion is staggering. To put those numbers in perspective, $65 trillion in liabilities equates to $557,745 per U.S. household. These liabilities represent a stone wall, and the locomotive is headed straight for it.

Even though the U.S. economy is facing such a train wreck, governmental leaders seem oblivious to the realities of basic economics. The Bush and...

About the Authors

Noted conservative economics adviser to Ronald Reagan and Margaret Thatcher, Arthur B. Laffer, Ph.D., heads Laffer Associates and Laffer Investments. Stephen Moore, senior economics writer for The Wall Street Journal editorial page, is a CNBC-TV contributor.

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