In 1970, the year after Jack Kemp had retired as quarterback of the Buffalo Bills, he was elected to the House from a district covering the Buffalo suburbs. He was 35. His chief concern was the suffering of his Rust Belt constituents, beset by plant closings and high unemployment. In 1973, he proposed a business-friendly tax cut, followed by another titled the Jobs Creation Act. Neither passed. Kemp, a phys. ed. major at Occidental College, had taught himself economics. He had read Ludwig von Mises, Friedrich Hayek, and Milton Friedman, the masters of free-market economics. In 1976, he met Jude Wanniski, a Wall Street Journal writer. Wanniski converted him to supply-side economics—sound money and deep cuts in income tax rates. Soon Kemp was the nexus of a movement of economists, congressmen, editorial writers and columnists, and, ultimately, Ronald Reagan. Kemp was its quarterback. From 1977 to 1981, Washington experienced the Kemp Era. His tax cuts, soon better known as Reaganomics, touched off a quarter-century of growth and prosperity.
On July 14, 1977, Kemp and Sen. William Roth introduced Kemp-Roth. Their press conference to unveil the tax-cut proposal was attended by only one reporter, from Roth’s home state of Delaware, so the measure attracted no immediate public attention. Within a year, however, it became official Republican policy.
Bruce Bartlett, Kemp’s staff economist, recalls the birth of Kemp-Roth this way:
I was sitting in my cubicle—this was . . . March or April of 1977—and Jack poked his head in and said something to the effect of “We keep talking all the time about the Kennedy tax cut [of 1964]. Why don’t we just replicate it? Let’s get rid of all this baggage and just do a clean, straight duplication of the Kennedy tax cut.” I said, “Fine,” of course. . . . But, it wasn’t that obvious what that meant because obviously the tax code was different. . . . So I talked to a lot of people to ask them, “If you were going to redo the Kennedy tax cut today, how would you do it?”
Bartlett’s search led him to economist Norman Ture. Ture had been a staffer for Wilbur Mills, the Arkansas Democrat who chaired the Ways and Means Committee from 1958 to 1974. Ture had helped Mills originate what became the Kennedy tax cuts. At Bartlett’s request, he agreed to help shape the new cuts. Bartlett also talked to economist Art Laffer and others in the Kemp orbit, and the brain trust agreed that the plan should reduce the top rate from 70 percent to 50 percent and the bottom from 14 percent to 8 percent, making an overall 30 percent cut that approximated Kennedy’s.
Kemp needed a cosponsor. William Roth, a member of the tax-writing Senate Finance Committee and a moderate Republican, came to Bartlett’s attention when he sent Kemp a handwritten note of praise. Kemp and his team lunched in the Senate Dining Room with Roth and his aides, and they found themselves broadly in agreement on Kemp’s plan to reduce income tax rates for individuals. President Kennedy’s bill, pushed through Congress after his death, had also cut corporate tax rates, so Kemp and Roth decided to propose cutting that rate from 48 to 45 percent. Roth just had one concern: Worried that Kemp’s bill would cost too much revenue, he asked for a smaller reduction to the bottom income tax rate and suggested phasing in the cuts over three years. Kemp agreed.
As Kemp and Roth prepared their bill, a pivotal player arrived out of the blue. Bill Brock, after losing his bid for reelection to the Senate in Tennessee in 1976, was elected Republican national chairman in 1977. The RNC boss held a challenging job, given the balance of power in Washington. Republicans had lost the White House, and after the devastating 1974 post-Watergate elections, the GOP was reduced to 37 Senate seats and 143 House seats. Democrats now had enough votes to block any GOP filibuster in the Senate and the two-thirds margin required to overturn vetoes in the House. Brock’s party was laid low—“clobbered,” he said. He was eager to attach the GOP to something new and positive, and swiftly became one of Kemp-Roth’s major boosters.
“We were, at least in perception, anti-women, anti-minority, anti-union, anti-poor,” Brock said. “Every negative you could put on the Republican party had been done because of Vietnam, civil rights, Nixon, Watergate. I was trying to create a different kind of party and it was [with] a deliberate objective of getting women elected, minorities elected, young people, blue collar, union. And we needed a catalytic agent. . . . Kemp, with his big-tent approach and his new ideas, could be that catalyst.”