"The math is the math. You can't lower (tax) rates and raise revenues."
- Barack Obama, December 11, 2011
When I heard the President make the above statement to Steve Kroft during an interview on the CBS News program 60 Minutes…well, I thought of Ronald Reagan. No, not because Obama seemed Reaganesque, as he would want us to believe, but because Ronald Reagan believed just the opposite, and proved that he was right.
And, I thought of Presidents Harding, Kennedy, and George W. Bush, too. All Presidents that had lowered tax rates that stimulated more economic activity – and increased the total revenue sent to the U.S. Treasury.
But, Obama seemed so sure of himself, as he is pretty good at doing, that I just had to go check the record. After all, he's the one who said, "The math is the math." So, I figured the numbers would hold the truth.
Warren G. Harding took office in March 1921 inheriting a huge debt from World War I and an economy in shambles. Harding had campaigned on a promise to slash spending, and once elected he put Charles Dawes, an experienced businessman and banker, in charge of the budget. In 1921, they reduced federal spending from $6.3 billion to $5 billion. In 1922, they slashed it to $3.3 billion – a reduction of 47.6% in just two years – and had the budget back in balance.
Harding believed the way to increase revenue was to stimulate economic activity and that meant going after the tax code. Harding and his Treasury Secretary Andrew Mellon understood that the top tax rate of 77 percent was encouraging wealthy Americans to seek tax shelters and investments that allowed them to avoid sending the government nearly 4 of every 5 dollars they made. Mellon said the following: