Art Laffer, an economic adviser to former President Ronald Reagan, told Newsweek that the economic downturn the United States is experiencing may not be ending anytime soon.
“There’s nothing that can bring an economy to its knees more than high inflation [and] high tax rates,” Laffer said during a recent interview. “I think today’s economy looks worse than it did under [former President] Jimmy Carter, and you saw what happened following Jimmy Carter. We had a political revolution that led to a long era of prosperity with Reagan through [former President Bill] Clinton.”
Along with his noted work as an economist, Laffer has worked in academia and frequently discusses economic issues on news programs. He is known for developing the Laffer Curve, a theory that illustrates the relationship between tax rates and the amount of tax revenue collected by the federal government. He also served as an economic adviser to former President Donald Trump during his 2016 presidential campaign. In 2019, Trump awarded Laffer the Presidential Medal of Freedom for his work in economics.
Discussing President Joe Biden’s economic policies, Laffer said the president “inadvertently…raised taxes a lot.”
“With this inflation, people are pushed into higher tax brackets. We have had very large increases in taxes purely and simply because of inflation,” he added.
Laffer drew parallels between current economic issues and those during Carter’s presidential administration in the 1970s. He cited several ways in which he said Carter hurt the economy, such as by placing an “excess profits tax on oil companies.”
Laffer said the work of Paul Volcker, who was appointed by Carter to head the Federal Reserve and stayed on for much of Reagan’s time in office, helped the sagging economy during that time from languishing further. He said a combination of Volcker raising interest rates “to way above the inflation rate” and Reagan making “huge tax cuts” resulted in “enormous increases in output for employment and production.”
“Volcker made it so you had less money. And when you have more goods and less money, you’re going to have a falling rate of inflation, and that’s exactly what happened,” Laffer said.