Endnotes A47Kennedy, and Johnson and part of Nixon’s first term. Paul
Volcker served under Carter and Reagan, while Alan
Greenspan’s tenure spanned the presidencies of Reagan,
Bush, Clinton, and the second Bush. Federal Reserve Board,
“Membership of the Board of Governors of the Federal
Reserve System, 1914–Present,” http://www.federalreserve.gov/
aboutthefed/bios/board/boardmembership.htm (accessed
7/16/1 4).
26. Federal Reserve Board, Annual Report, 2017, June 2018, Table
10, p. 319, and Table 13, p. 324, http://www.federalreserve.gov/
publications/annual-report/files/2017-annual-report.pdf
(accessed 7/30/18).
27. Senator Sherrod Brown, Hearing on the Nomination of Jay
Powell, Senate Banking Committee, November 28, 2017,
http://www.banking.senate.gov/imo/media/doc/Brown%20
Statement%2011-28-17.pdf (accessed 4/24/18).
28. Edward R. Tufte, Political Control of the Economy (Princeton,
NJ: Princeton University Press, 1978); Douglas Hibbs, “The
Partisan Model of Macroeconomic Cycles: More Theory and
Evidence for the United States,” Economics and Politics 6 (1994):
1–23.- Jim Granato, “The Effect of Policy-Maker Reputation and
Credibility on Public Expectations,” Journal of Theoretical
Politics 8 (1996): 449–70; Peter Conti-Brown, The Power and
Independence of the Federal Reserve (Princeton, NJ: Princeton
University Press, 2016). - U.S. Department of the Treasury, “Role of the Treasury,”
https://home.treasury.gov/about/general-information/role-
of-the-treasury (accessed 7/30/18). - United States Treasury, Resource Center, http://www.treasury.gov/
resource-center/faqs/Currency/Pages/edu_faq currency
production.aspx; United States Mint, 2017 Annual Report,
February 2018, http://www.usmint.gov/wordpress/wp-content/
uploads/2018/01/2017-annual-report.pdf (both accessed
4/24/18). - Carl Hulse, “Pressure Builds on House after Senate Backs
Ba i lout ,” New York Times, October 1, 2008, p. A1. - David M. Herszenhorn, “Bailout Plan Wins Approval;
Democrats Vow Tighter Rules,” New York Times, October 3,
2008, p. A1. - U.S. Department of Treasury, “TARP Tracker from November
2008 to June 2018,” http://www.treasury.gov/initiatives/financial-
stabilit y/repor ts/Pages/TA R P-Tracker.aspx#A ll (accessed
7/3 0/1 8 ). - The one area of loans that has not turned a profit yet is loans to
the auto industry. See U.S. Department of the Treasury, “TARP
Tracker from November 2008 to June 2018,” http://www.treasury.
gov/initiatives/financial-stability/reports/Pages/TARP-
Tracker.aspx#All (accessed 7/30/18). - “Recent Balance Sheet Trends,” Board of Governors of the
Federal Reserve System, July 25, 2018, http://www.federalreserve.
gov/monetarypolicy/bst_recenttrends.htm (accessed
7/3 0/1 8 ). - John Maynard Keynes, The General Theory of Employment,
Interest and Money (1936; repr., New York: Macmillan, 2007). - Brian Domitrovic, “Trashing JFK’s Tax Cuts, One of the
Greatest Policy Successes of All Time,” Forbes, March 12,
2013, http://www.forbes.com/sites/briandomitrovic/2013/03/12/
trashing-jfks-tax-cuts-one-of-the-greatest-policy-successes-
of-all-time/#347c0b863e2f (accessed 7/31/18). - In Laffer’s original argument, there was only one tax rate.
However, to apply the Laffer curve to the real world of tax
policy, the theoretical argument must be presented in terms
of the top marginal rate, which is the tax rate paid on the
last dollars earned (and thus the rate that inf luences the
marginal decision to work more or fewer hours). The end
point of zero tax revenue associated with a 100 percent tax
rate would be for Laffer’s single tax rate, rather than the top
marginal rate (because people would still work as long as
they could keep some income in the marginal brackets below
the top rate).
40. Arthur B. Laffer, “The Laffer Curve: Past, Present, and Future,”
Heritage Foundation Backgrounder #1765, June 1, 2004, http://www.
heritage.org/research/reports/2004/06/the-laffer-curve-
past-present-and-future (accessed 10/3/16).
41. These figures come from the Congressional Budget Office,
“Historical Budget Data,” http://www.cbo.gov (accessed 4/18/08).
Tax revenue fell from 19.6 percent of GDP in 1981, the last year
before the tax cuts went into effect, to 18.1 percent of GDP in
1988, the last year of the Reagan presidency. Individual income
tax revenue fell from 9.3 percent to 8 percent of GDP over the
same period, so most of the decrease in revenue was due to
lower individual income taxes. While overall government
spending did increase during the 1982–1983 recession, spending
from the beginning of Reagan’s term to the end dropped
slightly, from 22.2 percent to 21.2 percent of GDP.
42. Congressional Budget Office, “An Analysis of the President’s
2019 Budget,” May, 2018, Table 1, p.2, Table 4, p. 8 , http://www.cbo.
gov/system/files?file=2018-06/53884-apb2019.pdf (accessed
7/3 1 /1 8 ).
43. The “starve the beast” line is usually attributed to David
Stockman and his book The Triumph of Politics: The Inside
Story of the Reagan Revolution (New York: Avon Books, 1986).
A Web search for “David Stockman” and “starve the beast”
produced 566 hits, including a reference in a National Review
article: Norman B. Ture, “To Cut and to Please,” June 10, 2004,
http://www.nationalreview.com/article/211069/cut-and-please-
norman-b-ture (accessed 7/7/16). However, we have been
unable to find the phrase “starve the beast” in Stockman’s
book. More recently, smaller-government proponents such
as conservative political advocate Grover Norquist have
embraced the concept.
44. The payroll tax figure comes from Congressional Budget
Office, “The Distribution of Household Income and Federal
Taxes, 2010,” December 2013, Table 3, p. 13, http://cbo.
gov/sites/default/files/cbofiles/attachments/44604-
AverageTaxRates.pdf (accessed 6/30/14), and the income
tax figure comes from Scott Greenberg, “Summary of the
Latest Federal Income Tax Data, 2016,” Tax Foundation,
February 2017, Table 1, p. 2, https://files.taxfoundation.
org/20170201091804/TaxFoundation-FF540.pdf (accessed
7/3 1 /1 8 ).
45. Congressional Budget Office, “The Distribution of Household
Income, 2014,” March 2018, Figure 7, p. 1 6, http://www.cbo.gov/
system/files?file=115th-congress-2017-2018/reports/53597-
distribution-household-income-2014.pdf (accessed 9/7/18).
46. The details get a bit more complicated, but this is essentially
how money is created. Banks must hold a reserve of 10 percent
of all “demand deposits” (which is what economists call
checking accounts), so only $90,000 would actually be put into
the money stream because the $10,000 reserve would have to
come from money that someone deposited in the bank. Also,
the money supply would contract as you pay back your loan.
The overall effect on the money supply has to take into account
the “multiplier effect”—that is, the money you spend from your
loan will get spent many times over. The computer store will
take your $10,000 and deposit it in its bank, which allows that
bank to make more loans, and so on.
47. Milton Friedman, “The Quantity Theory of Money: A
Restatement,” in The Optimum Quantity of Money and Other
Essays (Chicago: Aldine, 1969), p. 52.Full_20_APT_64431_END_A23-A54.indd 47 15/11/18 2:38 PM