Memo To: John Kenneth Galbraith
From: Jude Wanniski
Re: You sly dog
Your Sunday op-ed in the NYTimes, “Economic Delusion, Political Disaster,” probably fooled 99.9% of the readers. Who the heck remembers what Herbert Hoover did almost 70 years ago? The fact that you are now in the sunny side of your 90s reminds me you were already in college when Hoover made a hash of the U.S. economy. It saddens me, though, to think that after all these decades, you still have not figured out why the stock market crashed in 1929 and why the Great Depression followed. With such an imperfect record of analysis, it was surprising to see you show up on the editpage, now arguing that President Bush should not be cutting taxes to get the economy back on track because HERBERT HOOVER CUT TAXES IN TRYING TO AVOID THE GREAT DEPRESSION AND THAT MOVE FAILED!!!!!!!!!!
I’ve laughed all day Sunday, you sly dog. You know that Hoover did cut the income tax in 1931 to a top marginal income-tax rate of 24% from a top marginal income-tax rate of 25%. YOU CALL ONE LOUSY PERCENTAGE POINT A TAX CUT? John, you really should throw in the towel on your lifelong pursuit of a 100% income-tax rate on anyone who makes more money than a Harvard economics professor. The fact is, as I believe you know but will not admit, the market Crash of 1929 was the result of the Republican’s enormous tax increase on imported goods, which we normally refer to as a TARIFF. It was the Smoot-Hawley Tariff Act of 1930 that was foreshadowed by the Senate in October 1929. You well know, professor that when I discovered the cause of the Crash and identified it, that I acknowledged your own thesis about mindless speculation and a “bubble” might have been the best at the time. But that idea was obliterated by my tariff thesis that international trade had been wrecked and that it was no wonder that equity prices headed south. You really should give me a tip of your hat instead of attacking the Bush tax cuts on the dopey idea that Herbert Hoover tried it and failed.
You know that after his one percentage point cut in income tax rates did not arrest the economic collapse caused by his Smoot-Hawley tariff, Hoover in 1932 RAISED THE INCOME TAX RATE TO 48% FROM 24%. The Great Depression really got serious, deepening as Franklin Roosevelt raised income-tax rates again and again in a maniacal attempt to balance the budget. Hey, were you involved in any of that? We do know that when President John F. Kennedy in late May 1962 proposed a serious cut in the 90% income-tax rate, that you, JOHN KENNETH GALBRAITH, then Ambassador to India, opposed the idea. Professor, we could excuse your opposition to cutting a 90% income-tax rate based on a childish indiscretion of a 50-year old Harvard economist. But now that you are inching your way to 100, childish indiscretions no longer constitute an alibi. I’ll not let you get away with punching Herbert Hoover around when it suits you -- whether for not raising taxes or for cutting taxes. You sly dog.