Donald Rumsfeld, Dick Cheney, and Dr. Art Laffer. You may not associate those first two names with fiscal policy, but they were present at the creation of one of the main theoretical constructs of supply-side economics, The Laffer Curve.
The three men were having lunch in Washington, D.C., along with Wall Street Journal Report reporter Jude Wanniski, when the conversation turned to how Rumsfeld and Cheney could help President Ford turn the economy around.
Dr. Laffer proceeded to whip out a Sharpie and start drawing on his white linen napkin, explaining to the men that while conventional wisdom tells us if you want more revenue, you raise taxes; but what the curve shows us is that if you want more revenue, you are better off lowering taxes to stimulate economic growth.
“It’s the same as always. It works. It’s not Republican, it’s not Democratic, it’s not conservative, it’s not liberal, it’s not left-wing, it’s not right-wing. It’s economics. People respond to incentives, and if you make something more attractive, they will do more of it. If you make something less attractive, they will do less of it. If you tax rich people and give the money to poor people, you are going to get lots and lots of poor people and no rich people. The dream in our country has always been to make the poor rich, not to make the rich poor.” – Dr. Laffer