GETTING UKRAINE MOVING AGAIN….. (Taking lessons from History.)

By: Vladimir Sirota

In the light of America's current situation and the poor leadership of the present administration, it would be wise to take a look at history, the administrations of Presidents Kennedy and Reagan and see that both took steps to lower marginal tax rates across-the-board.  The both understood that by doing so, the American people would realize more money in their pockets, their savings would also increase, small businesses would begin to spring up and large business and industries would begin to invest and grow. Large corporations and International Corporations would expand and some would even repatriate back to the US of A and America would experience such a economic boom as never before. As in the times of JFK and Reagan, the Federal Government would see their revenues rise such as to help reduce greatly our National debt.

I HAVE NOT HEARD OF ANY REPUBLICAN CANDIDATES ADVOCATING SUCH A POSITIVE MOVE IN THE CURRENT CAMPAIGN.

THE WORLD AND ESPECIALLY TODAY IN UKRAINE, WE NEED LEADERS IN GOVERNMENT WHO WILL TAKE SUCH A STAND..... TO REFORM GOVERNMENT, BRING IN TRANSPARANCY, ERRADICATE CORRUPTION AT ALL LEVELS AND LOWER TAXES.

KENNEDY

Kennedy decided that only a bold domestic program as he would propose, including tax cuts, could restore his political momentum. He declared that the absence of recession is not tantamount to economic growth, Kennedy then proposed in 1963 to cut income taxes from their current range of 20-91% to 14-65% He likewise proposed a cut in the corporate taxes from 52% to 47%. The nation saw economic growth expanded in 1963, and Republicans and conservative Democrats in Congress insisted that reducing taxes without any corresponding spending cuts would not be acceptable. They found that Kennedy strongly disagreed, by arguing that “a rising tide lifts all boats” and that strong economic growth would not be able to continue without the lower taxes.

Kennedy's battle over his tax cut proposal and the deficit continued unabated throughout 1963. After much discussion and debate, the House Ways and Means Committee voted a tax bill out of committee in August and the grateful president reiterated that by lowering taxes was the best and surest way to full employment and to lower our deficits. National polls showed that over 60% of  the Americans public were in favor of tax cuts. However, even with strong public support, there were key business leaders, as Henry Ford II and David Rockefeller who were in opposition and the Congressional log jam remained unbroken.

Kennedy ended the recession in two ways. First, by his setting an inspiring vision for the country in his Inaugural Address, where he said:  

"In the long history of the world, only a few generations have been granted the role of defending freedom in its hour of maximum danger. I do not shrink from this responsibility--I welcome it. I do not believe that any of us would exchange places with any other people or any other generation. The energy, the faith, the devotion which we bring to this endeavor will light our country and all who serve it--and the glow from that fire can truly light the world. 

And so, my fellow Americans: ask not what your country can do for you--ask what you can do for your country.

My fellow citizens of the world: ask not what America will do for you, but what together we can do for the freedom of man." (Source:John F Kennedy Inaugural Address January 20, 1961. 

Second, he was able to fulfill his campaign promise. In his first State of the Union Address, Kennedy said, " I will propose within the next 14 days measures aimed at insuring a prompt recovery and paving the way for increased long-range growth."

Kennedy was able to do this by pumping billions into the economy right away. He didn't require Congressional approval, he simply instructed Federal agencies to move their budgeted spending forward as quickly as possible. In this manner, Kennedy was able to dump a billion dollars in state highway funds into motion. Kennedy also accelerated payment of farm price supports, tax refunds and GI life insurance dividends. He moved to created a Food Stamp program, and expanded Employment Offices.

Kennedy finally asked the Federal Reserve to use its open market operations to buy up Treasury notes, keeping long-term interest rates low. The Fed also lowered the Fed funds rate from 4% to 1.98% to lower short-term rates.  All of these actions initiated and taken by President Kennedy helped in moving the economy forward and restoring the trust of the American people.

Kennedy did not stop there, he made clear that he would continue government spending as long as he felt it was needed to not only end the recession, but also get the recovery moving and off to a solid start. He made good on his promises. 

In addition to his spending program, JFK also advocated tax cuts. When he addressed  the Economic Club of New York in December 1962, he discussed spending more on national education, expanding R&D, and cutting taxes. However, at this time the upper tier income tax rate was 91%, which he wanted to lower it to  65%. 

REAGAN

Reagan promised, what later became known as the "Reagan Revolution," which was based on reducing government spending, taxes and regulation. His philosophy was "Government is not the solution to our problem, government is the problem."

President Reagan inherited an economy mired in what became known as stagflation -- it was  a combination of double-digit economic contraction with double-digit inflation. To combat the current recession, Reagan proposed to aggressively cut income taxes from 70% to 28%, and from 48% to 34% for the corporate tax rate. Reagan also promised to reduce government spending and regulations, while reducing the money supply to combat national inflation.

The Reagan economic policies became known as Reaganomics. Reagan would based his policies on the theory of supply side economics, which advocates the theory that as taxes are cut, they encourage economic expansion, such as to eventually broaden the tax base. In time, those increased revenue from a stronger economy would offsets the initial revenue loss from the tax cuts. Reagan's tax cuts program worked because tax rates at the beginning of the 80's were so high that they were in the "Prohibitive Range," according to Reagan's chief economist, Art Laffer.

Reagan was applauded for eliminating the Nixon-era price controls. These were to blame for holding back the free-market equilibrium that could have prevented inflation. Reagan also removed controlling regulations on oil and gas, cable television and long-distance phone service, including interstate bus service and ocean shipping.

The nation saw banking regulations eased and in 1982, the Garn-St. Germain Depository Institutions Act was passed bu Congress, which removed restrictions on loan-to-value ratios for Savings and Loan banks. The Reagan's budget cut also had an effect to reduce the regulatory staff at the Federal Home Loan Bank Board. As a result, banks invested in risky real estate ventures.

There were import barriers that were actually increased, as President Reagan doubled the number of items that were subject to trade restraint from 12% in 1980 to 23% in 1988. We find that very little was done in other regulatory areas affecting health, safety, and the environment. Though his accomplishments were many to help the American economy and people, yet he was unable to achieve all of his objectives due to the constraints of other pressing international concerns.

A lesson that could be learned from both President Kennedy and President Reagan and their administrations is that they clearly established what they believed were achievable goals, means and processes for attaining their objectives and then implemented the mechanisms to attain their results.

Ukraine as a relatively Democratic country, attempting to come out of the shadows of the former Soviet Union is at a pivotal point in its history. Though desiring to enter into alignment with the European Union and become fully free from and independent of ties with Russia, it is currently struggling with deep rooted systemic ties to the old.

The current leadership at all levels of government must have a complete renewal of the national desire and goal to break from the past and become a new and thriving country and that must begin with President Petro Poroshenko and then move down throughout all levels of th4e government. Then UKRAINE will be able to become a beacon of light in Eastern Europe.