The Kemp Era

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:

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.”

Nineteen seventy-eight proved to be a bonanza year for tax cutting. In January, Kemp and Roth reintroduced their bill, which had made political but not legislative progress in 1977. With tax-cut fever sweeping the nation, Brock, Kemp, and GOP congressional leaders saw to it that every House Republican candidate running in the midterm elections backed Kemp-Roth. Brock loaded prominent politicians aboard chartered airplanes for “fly arounds” to multiple cities, campaigning for the cuts. Kemp campaigned with missionary zeal for his bill and for GOP candidates that year. 

Kemp insisted Republicans needed to stop complaining about the cost of welfare, stop whining about balancing the budget, and think hard about how to stimulate growth. He went on to propound his “two wagons” theory of politics. The Republicans loaded the wagon (with goods and services), while the Democrats unloaded it (to the public)—both necessary jobs if the load was to benefit society. Calling Republicans the party of growth and the Democrats the party of distribution, he warned that Republicans had stopped doing their necessary job and were trying to do the Democrats’ work. “Surely it’s obvious that you can’t unload the wagon faster than you load it. Sooner or later, it’s empty and you are living hand to mouth,” a good description of the nation’s sorry condition of mid-1970s stagflation.

Despite Carter’s sinking approval rating and widespread public support for Kemp’s ideas, the midterm elections fell short of Republican expectations. They gained 3 Senate seats and 15 House seats. Kemp was reelected with a stunning 94.8 percent of the vote—the biggest margin of his career.

Looking toward the 1980 presidential campaign, some after-action analyses blamed Kemp-Roth for the failure to gain more seats. David Gergen, President Ford’s communications director, later a backer of George H. W. Bush against Reagan in 1980, wrote in the Washington Post that the Republican platform of cutting taxes without increasing spending cuts was a political misstep. Gergen acknowledged that Kemp-Roth had its virtues and that “Jack Kemp himself took off like a flaming meteor across the sky, as Republican audiences .  .  . warmly welcomed a dynamic new star.” But reflecting the conventional wisdom of senior Republicans, Gergen thought that supply-side Republicans “were fiscally irresponsible.”

The Wall Street Journal scoffed, taking direct aim at Gergen’s analysis in an editorial titled “Some Blunder.” It noted that Republicans had won 57 percent of the year’s Senate races, six new governorships, and 300 seats in state legislatures—“all by running on the wrong issue!” Kemp himself said the ’78 election showed Republicans had seized the political initiative with their new ideas: “Liberals did not dominate the 1978 elections. You don’t hear people call themselves fiscal liberals anymore.” The GOP had proved it had a message appealing to working people, he said.

Indeed, a dramatic beginning had been made. Kemp had gone from being a newcomer to a driving force in the party. He was building a national reputation. He hadn’t achieved his goals, but he was advancing a revolutionary bill. The question now was whether he or another candidate would carry his radical ideas forward into the highest office in the country.

‘Jack should run for president. The future of Western civilization depends on it!” Jude Wanniski, ever volatile and Kemp’s biggest supporter, voiced this opinion at a gathering of Kemp supporters as the 1980 primaries approached. He was hyperbolic, but not alone in his conviction. In 1978, Irving Kristol told journalist Martin Tolchin that Republicans didn’t want another Ford-Reagan race and were ready to move on to a new generation, with Kemp “the best able to communicate with the American people.” Former CBS president Frank Shakespeare, ex-Reagan policy adviser Jeff Bell, and former ambassador Larry Silberman began commissioning polls and plotting strategy. Ronald Reagan was considered the top contender for the nomination, but the supply-siders weren’t convinced he could be trusted. He certainly wouldn’t be more faithful to the cause than Jack Kemp.

Kemp had been the Republican star of 1978, and he spent 1979 tirelessly evangelizing for his tax-cut plan. But he gave his presidential boosters no serious encouragement. He wanted to support Reagan for president. The only question was whether Kemp-Roth rate cuts would be the centerpiece of Reagan’s campaign. If Reagan committed, Kemp would be on board. In the meantime, he kept his options open, worrying Reagan’s people that he might run for the nomination and at least cut into Reagan’s support.

The idea of a Kemp presidential bid in 1980 was not completely farfetched. Bell was courting Republican leaders in New York on behalf of a Kemp candidacy. Wanniski touted Kemp to everyone he spoke with. And Kemp was one of columnist Robert Novak’s “projects.” The Evans and Novak column, which appeared three times a week in the Washington Post, constantly promoted Kemp and tax cuts.

In early 1979 Kemp published An American Renaissance: A Strategy for the 1980s (Kemp acknowledged that the book was “organized” by Wanniski). It read like a campaign manifesto: “There is a tidal wave coming equivalent to the one that hit in 1932 when an era of Republican dominance gave way to the New Deal.” It contained enough policy recommendations to be a campaign platform, and it kept everyone guessing. Few who read it could be sure Kemp wouldn’t run for president.

Kemp made Reagan a special target of his outreach. Reagan had supply-side instincts and liked tax cuts. But he regularly advocated traditional Republican austerity as well. A centerpiece of his 1976 campaign was the “welfare queen,” an African-American woman in Chicago he asserted was fraudulently collecting $150,000 a year. He contrasted her with “hardworking people” who paid their bills and taxes. Kemp supported welfare reform, but he championed upward mobility for the urban poor and shunned use of racially tinged language. Cutting welfare was not a growth strategy, he argued.

Reagan had been an economics major at Eureka College in the pre-Keynesian era, he recalled in his autobiography. But “my experience with our tax laws in Hollywood probably taught me more about economic theory than I ever learned in a classroom or from an economist, and my views on tax reform did not spring from what people called supply-side economics.”

In Hollywood, he was a victim of high marginal rates. The top rate was 94 percent. Reagan paid lower rates for the first dollars he earned in a year, but the more he made, the higher his rate. “After a certain point, I received only six cents of each dollar I earned and the government got the rest.” He began asking himself, he wrote, whether it was worth taking on more work. A central purpose of supply-side economics was to lower marginal rates—the percentage paid on the next dollar earned—giving citizens the incentive to work, save, invest, and produce more. His experience made him receptive to conversion.

However, he was not a committed supply-sider. His frequent reversions to traditional GOP economics bothered Wanniski and others in the movement. In 1978, Reagan supported the RNC’s endorsement of Kemp-Roth as party policy. Yet he horrified supply-siders by telling a group of newsmen at his Pacific Palisades home, “Frankly, I’m afraid this country is just going to have to suffer two, three years of hard times to pay for the binge we’ve been on.”

In the summer of 1979, Wanniski and Laffer concocted a plot to make Kemp Reagan’s vice president. Kemp would run for president, but would privately assure Reagan that he’d instruct his delegates at the convention to vote for Reagan, delivering him the nomination. In gratitude, Reagan would pick Kemp as his running mate.

Laffer says Wanniski devised the scheme. Laffer coached Kemp to present it to Reagan at a dinner party at Laffer’s home in Palos Verdes. At some point in the evening, Kemp was to take Reagan aside and present the plan to him—without, of course, mentioning the vice presidency.

To Laffer’s consternation, Kemp did not follow the plan. He went for a chat with Reagan in Laffer’s guesthouse. But when he returned, Kemp told Laffer, “Oh, Art. I couldn’t do it. I pledged my support to him totally and said I’d never run against him whatsoever and he’s my hero.” Laffer responded, “Oh, my God. You just lost the vice presidency. You just lost the vice presidency.”

What undid the plot—not that it ever had much chance of success—was that John Sears, Reagan’s campaign manager, had arranged for Jack and Joanne Kemp to have lunch with Reagan earlier that day. Kemp quizzed the former governor about his dedication to supply-side policies and talked about how a tax-cuts-and-growth message could help the GOP win working-class voters. Reagan’s responses won Kemp over. In Laffer’s guesthouse, Kemp merely renewed his allegiance to Reagan. This time it stuck.

In early January 1980, Kemp, his chief of staff David Smick, Wanniski, and Kemp’s economist, John Mueller, attended a three-day issues-and-policy conference conducted by Reagan and his top staff at the Marriott Hotel at Los Angeles International Airport. Lew Lehr-man, Kemp’s favorite to be Reagan’s Treasury secretary, refers to the event as “the boarding party”—like pirates seizing a ship—in which Kemp’s team won Reagan’s commitment to run on Kemp-Roth tax cuts.

Some Reaganites, including Reagan himself, disputed the idea, contending Kemp and company were “pushing on an open door.” Reagan’s program had long been an amalgam of supply-side and old-fashioned Republicanism. Still, he had not run in 1976 on a low-tax platform. And in 1980, he did. Reagan was definitely on board with supply-side cuts, and Kemp was thrilled. He told David Stockman—then a supply-side House ally of Kemp’s but later Reagan’s anti-supply-side budget director—that Reagan “had an intuitive feel for the Laffer curve” and that the LAX session was “historic.” Sears, also at the LAX meeting, confirms that Reagan had not formally embraced Kemp-Roth in November 1979. “We had some things about taxes, but not Kemp-Roth. In January, we embraced it.” Kemp was jubilant.

The 1980 Republican convention proved to be a propitious event for Kemp. His speech was seen by millions—though it nearly wasn’t.

At the Detroit convention—the location chosen by Brock to demonstrate GOP concern for urban America—the party platform explicitly endorsed Kemp-Roth. Kemp chaired the platform committee’s foreign and defense policy subpanel. Cheerleading for Kemp, Novak wrote that his deft platform management had helped shed “the image of Kemp as a ‘Jacky-One-Note’ obsessed with tax reduction” and enhanced his slim chances of being chosen as Reagan’s running mate.

Kemp was assigned a prime-time speaking role, slotted Tuesday night between 1964 GOP nominee Barry Goldwater and former secretary of state Henry Kissinger. Kemp supporters organized a rousing demonstration for the conclusion of his speech, with Reagan/Kemp signs, banners, and pins promoting him for vice president.

The speech almost didn’t happen. As Smick recalls it, “the 71-year-old Goldwater started speaking and wouldn’t stop. Smick watched the clock ticking in a panic, fearing the demonstration he’d planned wouldn’t take place. And sure enough, “the word comes down from Mike Deaver [the top Reagan aide managing the convention]: ‘Kemp’s out. Kissinger goes on at 10:20 and that’s it.’ ” Kemp took a phone call from Deaver and assented to being bumped to the next night, not in prime time and after Reagan had chosen his running mate. “Deaver, I’m sure, didn’t want the pressure of this ‘spontaneous’ demonstration. So Kemp says to me, ‘Look, we did our best. We’ll regroup for tomorrow.’ ” Kemp walked out of the podium holding area and into the mass of delegates on the convention floor.

But as Smick was walking the other way, he heard over the loudspeakers, “And he played for the San Diego Chargers .  .  .” The stage organizer of the convention was a congressman from Delaware, Tommy Evans, a friend of Kemp’s. When Deaver ordered Kemp cut from the program, Evans said, “The hell we are,” and told the woman making introductions from the podium, “Introduce Kemp, introduce Kemp. Do it!”

But Smick couldn’t find Kemp to call him back to the platform. “It’s like finding somebody at a football game. But that hair. I see Kemp’s big shock of hair.” Smick raced through the crowd and told Kemp he was next up. “You know, that guy lived a charmed life. He runs back. He climbs the steps. Talk about adrenaline, right?

“He goes out, he doesn’t even look at the teleprompter after the first two lines. .  .  . He gives the speech of his life. And after it’s over the ‘spontaneous demonstration’ takes off and it was spectacular. It was his introduction as a national figure, which almost never happened.”

The speech was a triumph, a concentrated statement of everything Kemp believed about politics and its purpose. It distinguished him from nearly every other speaker at that convention in that Kemp showed the opposition the respect of calling it by its name, the Democratic party—not, derisively, “the Democrat party.” But most of all, the speech was an ode to his guiding philosophy, the American idea.

As he finished, the Reagan/Kemp demonstration erupted, many delegates eager for Kemp to fill the VP slot. Kemp knew there was little chance he would be tapped. And in fact, once George Bush agreed to support Reagan’s agenda, Reagan chose him. On the campaign trail, Bush had derided supply-side ideas as “voodoo economics.” Reagan confidant Ed Meese called Bush’s acceptance of supply-side at the convention “an exorcism at Detroit.”

The tax-cut revolution sparked by Kemp scored its most dramatic political triumph on Election Day 1980, but it had yet to be translated into national policy. In that endeavor—and its defense under unremitting attack—Kemp was also a leader.

No sooner was Reagan elected than discord broke out among his advisers about economic policy, and a scramble began for the posts that would influence it. Reagan would win historic legislative victories in the first year of his presidency—notably passing a revised version of Kemp-Roth—but ideological struggles between supply-siders and Republican traditionalists dogged the process. Kemp, largely relegated to a secondary role during the 1980 campaign—and also a congressional backbencher—became a key player for the rest of the Reagan presidency. He’d won Reagan over. Now he would help wage the Reagan revolution.

In Congress, he moved from being leader of the supply-side faction of young House conservatives to the number three leadership position in the House GOP: chairman of the Republican Conference. That gave him regular access to Reagan and the White House staff.

As Reagan prepared to take office, Kemp was present at crucial early economic policy-making sessions. And he successfully lobbied for allies to take significant positions in the new administration—notably Rep. David Stockman to be director of the Office of Management and Budget. Stockman had convinced Kemp and others that he was a committed supply-sider, but he swiftly turned into one of the leaders of the deficit-hawk, tax-raising, and budget-balancing conventional Republican forces. Supply-siders, including some Kemp allies who got jobs in the Treasury Department, considered Stockman a turncoat and a traitor. Kemp was more generous, but—remaining loyal to his ideas—constantly fought him and his powerful allies in the White House and Congress. For eight years, the press delighted in writing stories about the “battle for Reagan’s mind” as Kemp and his team tried to persuade Reagan to stay on a supply-side course.

Kemp, the ex-quarterback, developed a strong inner circle of allies—the “backfield” he could count on to receive his handoffs, catch his passes, and move policy down the field toward the goal line. One member was Vin Weber of Minnesota, who over time became one of his closest allies. Weber got elected to Congress in 1980, at age 28, literally reciting the Kemp message from memory to campaign audiences. The most prominent member of Kemp’s team was future House speaker Newt Gingrich, elected in 1978. He continued to have powerful support from columnist Bob Novak, too, as well as the Wall Street Journal editorialists who had been with him for four years. 

On the other side were Reagan’s top White House staff: the chief of staff, James Baker; his deputy, Richard Darman; the communications director, David Gergen; and the supposed supply-sider Stockman. In the Senate, Bob Dole, the new chairman of the Finance Committee, and Pete Domenici, chairman of the Budget Committee, were among the staunch traditionalists. The mainstream press, notably the New York Times and the Washington Post, served as outlets for the traditionalists—or “pragmatists,” as they labeled themselves.

There was a problem: Reagan himself was unsure whether he had promised during his campaign to reduce tax rates or merely reduce taxes. Laffer said he was at a meeting in the Oval Office with a dozen or so top Reagan aides and outside advisers when Reagan asked which he had promised. The president’s pollster, Richard Wirthlin, and his communications guru, Michael Deaver, convinced him he’d only promised overall tax reductions, not an across-the-board rate cut for everyone. To the horror of the supply-siders, the confusion led to the watering down of Kemp-Roth. By the time Reagan’s cuts were enacted, Kemp’s (and Reagan’s) original 30 percent cut was only 23 percent and its effective date was postponed until October 1981. By then, the economy was plunging into recession.

Reagan announced his economic program on February 18, 1981, to a joint session of Congress. Compromises began being made in the run-up. Though Reagan and his advisers had agreed in Los Angeles to three years of across-the-board 10 percent tax cuts, it was decided that the program would not apply to high-income taxpayers. And there would be no cut in capital gains taxes.

To Kemp’s dismay, the campaign for tax compromise finally succeeded when Reagan accepted a 5 percent first-year cut effective October 1. He was persuaded on the basis of the need to secure the votes of southern “boll weevil” Democrats concerned about growing deficits. The estimated cost of the bill for 1982 dropped from $53.9 billion to $37.4 billion. Reagan acknowledged it would “not quite do the job, but will have generally the same effect” as the full 30 percent reduction. 

The watered-down bill passed the House 238-195. After the vote, Kemp received a standing ovation from colleagues in the House chamber. And he received a call of congratulations from Reagan. He told Reagan, “I want your support for my next tax bill—a 30 percent rate reduction in your next term.” Kemp said Reagan replied, “Gee, Jack, I thought we’d go for 40 percent next time.”

The final tax measure, known as ERTA (the Economic Recovery and Tax Act of 1981), was processed by a House-Senate conference committee and passed the Senate, 67-8, on August 3 and the House, 282-95 the next day. 

Kemp was hailed by his colleagues and congratulated by Reagan, but not by White House “pragmatists.” Reagan signed the bill on August 13—in California, not in a White House ceremony surrounded by its supporters. Reagan later held a reception for congressional staff members who had worked on his economic program, dominated by those who had tried to water it down. Omitted from the invitation list were conservative staffers from both houses who had fought for the Kemp-Roth tax bill before it became Reagan’s and then went all out for the president’s program.

Despite some measure of victory with the tax cuts, for Kemp 1981 had not been a complete success. He’d lost Stockman as an ally, and his tax cuts—which had barely gone into effect—hadn’t boosted the economy. Reagan’s first year ended with the economy diving into deep recession. The GDP growth rate for the last quarter of 1981 was minus 4.9 percent. And it was minus 6.4 percent for the first quarter of 1982 and minus 1.9 percent for the year. Critics duly pronounced his economic policy a failure.

But Kemp had faith that the years of plenty would come if Reagan and Congress didn’t reverse course. Kemp took a group of conservatives to meet with Reagan in mid-December to argue that the president should speed up the effective date of 1982 tax cuts to January 1 instead of July 1, to stimulate the failing economy. Official White House spokesmen rejected the idea, however, so Kemp was back twice in December to argue the case. To no avail.

Stonewalled by the administration, Kemp found himself in frequent conflict with the president over the next seven years, despite his personal loyalty to Reagan and his official position as a GOP leader in Congress. He was vilified for the conflict, but he persisted, believing that lower taxes fostered growth and tax increases deepened the recession. Fortunately, he had the charisma to attract a backfield to support him in his fight—and the wisdom and good luck to put together a front line to protect him.

Kemp was in his office, watching the closed-circuit feed from the House floor on May 3, 1983, as the House debated how to help the United States compete to host the 1986 World Cup soccer finals. Suddenly he bolted. One aide yelled to another, “Catch him!” but by then he’d run out the door and into the elevator headed for the floor. There he proceeded (with only “some tongue in cheek,” he said) to denounce soccer as a “European socialist” sport, as opposed to football, which “is democratic capitalism.”

“Football is football and soccer is soccer,” he said. “Soccer does not have a quarterback. Only football has a quarterback.” He said he wished that the World Cup’s sponsor, the International Football Association, would change its name, lest young people confuse the event with “the Super Bowl, the world’s greatest spectator event, with all due respect to soccer and baseball.” When he got back to his office, he told his aides he’d get his remarks expunged from the Congressional Record, as members often do when they say something ill-considered. But he didn’t.

This article is adapted from Jack Kemp: The Bleeding-Heart Conservative Who Changed America by Morton Kondracke and Fred Barnes (Sentinel).